10-Q 1 nem-20160331x10q.htm 10-Q nem_Q1_Current folio_10Q_Taxonomy2015

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 


 

Form 10-Q

 


(Mark One)

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

For the Quarterly Period Ended March 31, 2016

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

 


Picture 2 

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

(Address of Principal Executive Offices)

 

(Zip Code)

 

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

 


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes      No

 

Indicate by check mark whether the registrant has submitted electronically 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).      Yes      No

 

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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12-b2 of the Exchange Act.

 

 

 

 

 

 

 

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

(Do not check if a smaller reporting company.)

Smaller reporting company

 

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

 

There were 530,530,905 shares of common stock outstanding on April 13, 2016.

 

 

 


 

TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

Page

 

 

PART I – FINANCIAL INFORMATION

 

 

ITEM 1. 

 

FINANCIAL STATEMENTS

 

1

 

 

Condensed Consolidated Statements of Income

 

1

 

 

Condensed Consolidated Statements of Comprehensive Income

 

2

 

 

Condensed Consolidated Statements of Cash Flows

 

3

 

 

Condensed Consolidated Balance Sheets

 

4

 

 

Notes to Condensed Consolidated Financial Statements

 

5

ITEM 2. 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

 

44

 

 

Overview

 

44

 

 

Selected Financial and Operating Results

 

46

 

 

Consolidated Financial Results

 

46

 

 

Results of Consolidated Operations

 

51

 

 

Liquidity and Capital Resources

 

56

 

 

Environmental

 

58

 

 

Accounting Developments

 

59

 

 

Non-GAAP Financial Measures

 

59

 

 

Safe Harbor Statement

 

66

ITEM 3. 

 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

68

ITEM 4. 

 

CONTROLS AND PROCEDURES

 

70

 

 

PART II – OTHER INFORMATION

 

 

ITEM 1. 

 

LEGAL PROCEEDINGS

 

71

ITEM 1A. 

 

RISK FACTORS

 

71

ITEM 2. 

 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 

 

71

ITEM 3. 

 

DEFAULTS UPON SENIOR SECURITIES

 

71

ITEM 4. 

 

MINE SAFETY DISCLOSURES

 

71

ITEM 5. 

 

OTHER INFORMATION

 

72

ITEM 6. 

 

EXHIBITS

 

72

SIGNATURES 

 

73

EXHIBIT INDEX 

 

74

 

 

 

 


 

PART I—FINANCIAL INFORMATION

 

ITEM 1.FINANCIAL STATEMENTS

 

NEWMONT MINING CORPORATION

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited, in millions except per share)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 

 

 

    

2016

    

2015

  

Sales

 

$

2,032

 

$

1,972

 

 

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

Costs applicable to sales (1) 

 

 

1,081

 

 

1,027

 

Depreciation and amortization

 

 

322

 

 

289

 

Reclamation and remediation (Note 5)

 

 

25

 

 

23

 

Exploration 

 

 

30

 

 

33

 

Advanced projects, research and development

 

 

28

 

 

28

 

General and administrative 

 

 

57

 

 

58

 

Other expense, net

 

 

18

 

 

17

 

 

 

 

1,561

 

 

1,475

 

Other income (expense)

 

 

 

 

 

 

 

Other income, net

 

 

98

 

 

11

 

Interest expense, net

 

 

(79)

 

 

(85)

 

 

 

 

19

 

 

(74)

 

Income (loss) before income and mining tax and other items

 

 

490

 

 

423

 

Income and mining tax benefit (expense) (Note 6)

 

 

(324)

 

 

(193)

 

Equity income (loss) of affiliates

 

 

(5)

 

 

(9)

 

Income (loss) from continuing operations 

 

 

161

 

 

221

 

Income (loss) from discontinued operations

 

 

(26)

 

 

8

 

Net income (loss)

 

 

135

 

 

229

 

Net loss (income) attributable to noncontrolling interests (Note 7)

 

 

(83)

 

 

(46)

 

Net income (loss) attributable to Newmont stockholders 

 

$

52

 

$

183

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Newmont stockholders:

 

 

 

 

 

 

 

Continuing operations 

 

$

78

 

$

175

 

Discontinued operations 

 

 

(26)

 

 

8

 

 

 

$

52

 

$

183

 

Income (loss) per common share (Note 8)

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

Continuing operations 

 

$

0.15

 

$

0.35

 

Discontinued operations 

 

 

(0.05)

 

 

0.02

 

 

 

$

0.10

 

$

0.37

 

Diluted:

 

 

 

 

 

 

 

Continuing operations 

 

$

0.15

 

$

0.35

 

Discontinued operations 

 

 

(0.05)

 

 

0.02

 

 

 

$

0.10

 

$

0.37

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share 

 

$

0.025

 

$

0.025

 

 


(1)

Excludes Depreciation and amortization and Reclamation and remediation. 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

1


 

NEWMONT MINING CORPORATION

 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in millions)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 

 

 

    

2016

    

2015

    

Net income (loss)

 

$

135

 

$

229

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

Change in marketable securities, net of $nil and $nil tax benefit (expense), respectively

 

 

(77)

 

 

1

 

Foreign currency translation adjustments 

 

 

3

 

 

(10)

 

Change in pension and other post-retirement benefits, net of $(2) and $(2), tax benefit (expense), respectively

 

 

3

 

 

5

 

Change in fair value of cash flow hedge instruments, net of $(8) and $4, tax benefit (expense), respectively

 

 

19

 

 

(10)

 

Other comprehensive income (loss)

 

 

(52)

 

 

(14)

 

Comprehensive income (loss)

 

$

83

 

$

215

 

 

 

 

 

 

 

 

 

Comprehensive income (loss) attributable to:

 

 

 

 

 

 

 

Newmont stockholders 

 

$

 —

 

$

169

 

Noncontrolling interests

 

 

83

 

 

46

 

 

 

$

83

 

$

215

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

2


 

NEWMONT MINING CORPORATION

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

(unaudited, in millions)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 

 

 

    

2016

    

2015

 

Operating activities:

 

 

 

  

 

 

 

Net income (loss)

    

$

135

  

$

229

 

Adjustments:

 

 

 

  

 

 

 

Depreciation and amortization

 

 

322

  

 

289

 

Stock-based compensation

 

 

16

 

 

20

 

Reclamation and remediation

 

 

24

 

 

23

 

Loss (income) from discontinued operations

 

 

26

 

 

(8)

 

Impairment of investments

 

 

 —

 

 

57

 

Deferred income taxes 

 

 

153

  

 

61

 

Gain on asset and investment sales, net

 

 

(104)

 

 

(44)

 

Other operating adjustments and impairments

 

 

92

 

 

74

 

Net change in operating assets and liabilities (Note 20)

 

 

(140)

  

 

(73)

 

Net cash provided by continuing operating activities

 

 

524

  

 

628

 

Net cash used in discontinued operations

 

 

(2)

  

 

(3)

 

Net cash provided by operating activities

 

 

522

  

 

625

 

Investing activities:

 

 

 

  

 

 

 

Additions to property, plant and mine development 

 

 

(297)

  

 

(284)

 

Sales of investments

 

 

184

 

 

29

 

Proceeds from sale of other assets

 

 

6

 

 

44

 

Other 

 

 

(4)

  

 

(3)

 

Net cash used in investing activities 

 

 

(111)

  

 

(214)

 

Financing activities:

 

 

 

  

 

 

 

Repayment of debt 

 

 

(499)

  

 

(205)

 

Sale of noncontrolling interests

 

 

 —

 

 

37

 

Funding from noncontrolling interests

 

 

12

 

 

47

 

Dividends paid to noncontrolling interests 

 

 

(146)

  

 

(3)

 

Dividends paid to common stockholders 

 

 

(13)

  

 

(12)

 

Increase in restricted cash, net

 

 

(91)

  

 

(55)

 

Other

 

 

(1)

 

 

(5)

 

Net cash used in financing activities

 

 

(738)

 

 

(196)

 

Effect of exchange rate changes on cash 

 

 

6

  

 

(20)

 

Net change in cash and cash equivalents 

 

 

(321)

  

 

195

 

Cash and cash equivalents at beginning of period 

 

 

2,782

  

 

2,403

 

Cash and cash equivalents at end of period 

 

$

2,461

  

$

2,598

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

3


 

NEWMONT MINING CORPORATION

 

CONDENSED CONSOLIDATED BALANCE SHEETS 

(unaudited, in millions)

 

 

 

 

 

 

 

 

 

 

 

   At March 31,    

 

At December 31, 

 

 

    

2016

    

2015

 

ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,461

 

$

2,782

 

Trade receivables

 

 

273

 

 

260

 

Other accounts receivables

 

 

222

 

 

185

 

Investments (Note 13)

 

 

27

 

 

19

 

Inventories (Note 14)

 

 

710

 

 

710

 

Stockpiles and ore on leach pads (Note 15)

 

 

864

 

 

896

 

Other current assets

 

 

223

 

 

131

 

Current assets

 

 

4,780

 

 

4,983

 

Property, plant and mine development, net

 

 

14,284

 

 

14,303

 

Investments (Note 13)

 

 

240

 

 

402

 

Stockpiles and ore on leach pads (Note 15)

 

 

3,021

 

 

3,000

 

Deferred income tax assets

 

 

1,533

 

 

1,718

 

Other non-current assets

 

 

695

 

 

730

 

Total assets

 

$

24,553

 

$

25,136

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

Debt (Note 16)

 

$

335

 

$

149

 

Accounts payable

 

 

367

 

 

396

 

Employee-related benefits

 

 

196

 

 

293

 

Income and mining taxes payable

 

 

75

 

 

38

 

Other current liabilities (Note 17)

 

 

485

 

 

540

 

Current liabilities

 

 

1,458

 

 

1,416

 

Debt (Note 16)

 

 

5,369

 

 

6,041

 

Reclamation and remediation liabilities (Note 5)

 

 

1,821

 

 

1,800

 

Deferred income tax liabilities

 

 

865

 

 

840

 

Employee-related benefits

 

 

454

 

 

437

 

Other non-current liabilities (Note 17)

 

 

333

 

 

310

 

Total liabilities

 

 

10,300

 

 

10,844

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

Common stock

 

 

849

 

 

847

 

Additional paid-in capital

 

 

9,437

 

 

9,427

 

Accumulated other comprehensive income (loss) (Note 19)

 

 

(386)

 

 

(334)

 

Retained earnings

 

 

1,449

 

 

1,410

 

Newmont stockholders' equity

 

 

11,349

 

 

11,350

 

Noncontrolling interests

 

 

2,904

 

 

2,942

 

Total equity (Note 18)

 

 

14,253

 

 

14,292

 

Total liabilities and equity

 

$

24,553

 

$

25,136

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

 

 

4


 

Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

NOTE 1     BASIS OF PRESENTATION

 

The interim Condensed Consolidated Financial Statements (“interim statements”) of Newmont Mining Corporation and its subsidiaries (collectively, “Newmont” or the “Company”) are unaudited. In the opinion of management, all adjustments (including normal recurring adjustments) and disclosures necessary for a fair presentation of these interim statements have been included. The results reported in these interim statements are not necessarily indicative of the results that may be reported for the entire year. These interim statements should be read in conjunction with Newmont’s Consolidated Financial Statements for the year ended December 31, 2015 filed on February 17, 2016 on Form 10-K. The year-end balance sheet data was derived from the audited financial statements and, in accordance with the instructions to Form 10-Q, certain information and footnote disclosures required by United States generally accepted accounting principles (“GAAP”) have been condensed or omitted. References to “A$” refers to Australian currency and “C$” refers to Canadian currency.

 

The Company has reclassified certain prior period amounts to conform to the 2016 presentation including the following items:

 

The Company retrospectively adopted Accounting Standards Update (“ASU”) 2015-03, which requires debt issuance costs to be presented as a deduction from the corresponding debt liability. Refer to Note 2 for further details.

 

The Company reclassified regional administrative costs of $14 from Other expense, net to General and administrative and community development costs of $8 from Other expense, net to Costs applicable to sales for the quarter ended March 31, 2015.

 

NOTE 2     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Risks and Uncertainties

 

As a global mining company, the Company’s revenue, profitability and future rate of growth are substantially dependent on prevailing prices for gold, copper and, to a lesser extent, silver. Historically, the commodity markets have been very volatile, and there can be no assurance that commodity prices will not be subject to wide fluctuations in the future. A substantial or extended decline in commodity prices could have a material adverse effect on the Company’s financial position, results of operations, cash flows, access to capital and on the quantities of reserves that the Company can economically produce. The carrying value of the Company’s Property, plant and mine development,  net, Inventories, Stockpiles and ore on leach pads and Deferred income tax assets are sensitive to the outlook for commodity prices. A decline in the Company’s long term price outlook from current levels could result in material impairment charges related to these assets.

 

In September 2014, PT Newmont Nusa Tenggara (“PTNNT”) and the Government of Indonesia signed a Memorandum of Understanding (“MoU”) that resulted in the government agreeing to issue permits to allow PTNNT to export and sell copper concentrates from the Batu Hijau mine (“Batu Hijau”). The government then issued several six month export permits commencing in September 2014, March 2015 and November 2015. The most recent November permit was issued following a two month delay and expires in May 2016. Effective with the signing of the MoU, PTNNT agreed to pay certain export duties and royalties. The MoU also outlines terms for the six main elements of the Contract of Work (the investment agreement entered into by PTNNT and the Indonesian government in 1986, which includes the right to export copper concentrates and a prohibition against new taxes, duties, and levies) renegotiation, which will be incorporated into an amendment of the Contract of Work. The six areas are: 1) concession area size; 2) royalties, taxes and export duties; 3) domestic processing and refining; 4) ownership divestment; 5) utilization of local manpower, domestic goods and services; and 6) duration of the Contract of Work. Negotiations between PTNNT and the Government of Indonesia to amend the Contract of Work remain on-going. No assurances can be made at this time with

5


 

Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

respect to the outcome of such negotiations and the renewal of the export permit. The failure to receive a timely renewal may negatively impact future operations and financial results at Batu Hijau. As a result of the on-going Contract of Work renegotiations at Batu Hijau, the need for asset impairments, inventory write-downs, tax valuation allowances and other applicable accounting charges will continue to be evaluated. At this time, the Company expects operations to continue into the future. The total assets at Batu Hijau as of March 31, 2016 and December 31, 2015 were $3,726 and $3,483, respectively.

 

During the last several years, Minera Yanacocha S.R.L. (“Yanacocha”), in which the Company owns 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. The Company cannot predict whether similar or more significant incidents will occur in the future. The recurrence of significant political or community opposition or protests could continue to adversely affect Conga’s development and the continued operation of Yanacocha. Construction activities on the 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. In the first half of 2014, a Conga Restart Study was completed to identify and test alternatives to advancing development of the project. Following this assessment, a new plan was developed to reduce spending to focus on only the most critical work – protecting people and assets, engaging with communities, and maintaining existing project infrastructure – while maintaining optionality. Newmont will not proceed with the full development of Conga without social acceptance, solid project economics and potentially another partner to help defray costs and risk; it is currently difficult to predict when or whether such events may occur. Under the current social and political environment, the Company does not anticipate being able to develop Conga for the foreseeable future. Should the Company be unable to develop Conga, the Company may in the future reprioritize and reallocate capital to development alternatives which may result in an impairment of the Conga Project. The total assets at Conga as of March 31, 2016 and December 31, 2015 were $1,674 and $1,678, respectively.

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the accounting for and recognition and disclosure of assets, liabilities, equity, revenues and expenses. The Company must make these estimates and assumptions because certain information used is dependent on future events, cannot be calculated with a high degree of precision from data available or simply cannot be readily calculated based on generally accepted methodologies. Actual results could differ from these estimates.

 

Recently Adopted Accounting Pronouncements

 

Employee benefit plan accounting

 

In July 2015, the Financial Accounting Standards Board issued ASU No. 2015-12 related to defined benefit pension plans, defined contribution pension plans, and health and welfare benefit plans. This update designates contract value as the only required measure for fully benefit-responsive investment contracts, simplifies and makes more effective the investment disclosure requirements for employee benefit plans, and provides a simplified method for determining the measurement date for employee benefit plans. The update is effective in fiscal years, including interim periods, beginning after December 15, 2015. Adoption of this guidance effective January 1, 2016 had no impact on the Consolidated Financial Statements or disclosures.

 

Fair value measurement

 

In May 2015, ASU No. 2015-07 was issued related to investments for which fair value is measured, or are eligible to be measured, using the net asset value per share practical expedient. This update removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per

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Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

share practical expedient. The amendment also removes certain disclosure requirements for these investments. This update will impact the annual disclosure related to pension plan assets measured at fair value. This update is effective in fiscal years, including interim periods, beginning after December 15, 2015. Adoption of this guidance effective January 1, 2016 had no impact on the Consolidated Financial Statements.

 

Debt issuance costs

 

In April 2015, ASU No. 2015-03 was issued related to debt issuance costs. This update simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability. The update is effective in fiscal years, including interim periods, beginning after December 15, 2015. The Company retrospectively adopted this guidance as of March 31, 2016. The Company reclassified $46 of debt issuance costs from Other non-current assets to Debt as of December 31, 2015. The December 31, 2015, balance sheet was adjusted as a result of the adoption of ASU 2015-03 as follows:

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2015

 

 

    

As Reported

    

As Adjusted

    

Other non-current assets

 

$

776

 

$

730

 

Debt (non-current)

 

$

6,087

 

$

6,041

 

 

ASU No. 2015-03 does not specifically address the accounting for deferred financing costs related to line-of-credit arrangements. In August 2015, ASU No. 2015-15 was issued allowing for debt issuance costs associated with line-of-credit arrangements to continue to be presented as assets. The Company will treat all debt issuance costs as a reduction to the carrying value of debt.

 

Consolidations

 

In February 2015, ASU No. 2015-02 was issued related to consolidations. This update makes some targeted changes to current consolidation guidance and impacts both the voting and the variable interest consolidation models. In particular, the update changes how companies determine whether limited partnerships or similar entities are variable interest entities. The update is effective in fiscal years, including interim periods, beginning after December 15, 2015. The Company currently consolidates certain variable interest entities and adoption of this guidance effective January 1, 2016 had no impact on the Consolidated Financial Statements or disclosures.

 

Recently Issued Accounting Pronouncements

 

Stock-based compensation

 

In March 2016, ASU No. 2016-09 was issued related to stock-based compensation. The new guidance simplifies the accounting for stock-based compensation transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This update is effective in fiscal years, including interim periods, beginning after December 15, 2016, and early adoption is permitted. The Company is currently evaluating this guidance and the impact it will have on the Consolidated Financial Statements and disclosures.

 

Leases

 

In February 2016, ASU No. 2016-02 was issued related to leases. The new guidance modifies the classification criteria and requires lessees to recognize the assets and liabilities arising from most leases on the balance sheet. This update is effective in fiscal years, including interim periods, beginning after December 15, 2018, and early adoption is

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Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

permitted. The Company is currently evaluating this guidance and the impact it will have on the Consolidated Financial Statements and disclosures.

 

Investments

 

In January 2016, ASU No. 2016-01 was issued related to financial instruments. The new guidance requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. This new guidance also updates certain disclosure requirements for these investments. This update is effective in fiscal years, including interim periods, beginning after December 15, 2017, and early adoption is not permitted. The Company is currently evaluating this guidance and the impact it will have on the Consolidated Financial Statements and disclosures.

 

Inventory

 

In July 2015, ASU No. 2015-11 was issued related to inventory, simplifying the subsequent measurement of inventories by replacing the lower of cost or market test with a lower of cost and net realizable value test. The update is effective in fiscal years, including interim periods, beginning after December 15, 2016, and early adoption is permitted. The Company does not expect the updated guidance to have an impact on the Consolidated Financial Statements or disclosures.

 

Revenue recognition

 

In May 2014, and further amended in August 2015, March 2016 and April 2016, ASUs No. 2014-09, No. 2015-14, No. 2016-08, and No. 2016-10 were issued related to revenue from contracts with customers. The new standard provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition. In August 2015, the effective date was deferred to reporting periods, including interim periods, beginning after December 15, 2017, and will be applied retrospectively. Early adoption is not permitted. The Company is currently evaluating this guidance and the impact it will have on the Consolidated Financial Statements and disclosures.

 

NOTE 3    BUSINESS ACQUISITION

 

On June 8, 2015, the Company announced an agreement with AngloGold Ashanti Limited to acquire 100% ownership in the Cripple Creek & Victor (“CC&V”) gold mining business in Colorado. CC&V is a surface mine with heap leach operations that provides ore to a crusher and a leach facility. During 2015, the Company received $675 in net proceeds from a common stock issuance. Newmont used the proceeds, supplemented with cash from the Company’s balance sheet, to fund the acquisition. On August 3, 2015, the Company completed the acquisition of CC&V for $821, plus a 2.5% net smelter return royalty on future gold production from underground ore which had no fair value at the acquisition date. The acquisition is not material to the Company's results of operations, individually or in the aggregate; as a result, no pro forma financial information is provided.

 

The final valuation of acquired assets and liabilities assumed is not complete. The principal remaining items to be valued are stockpile and leach pad inventory values, which will be finalized as management monitors actual versus forecasted leach pad and mill performance for both recoveries and costs. The Company expects these final valuations and assessments to be completed in the first half of 2016. For further discussion of the CC&V acquisition, refer to Note 3 to the Consolidated Financial Statements for the year ended December 31, 2015 filed February 17, 2016 on Form 10-K.

 

 

8


 

Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

NOTE 4     SEGMENT INFORMATION

 

The Company has organized its operations into four geographic regions. The geographic regions include North America, South America, Asia Pacific and Africa and represent the Company’s operating segments. The operating results of these operating segments are reviewed by the Company’s chief operating decision maker to make decisions about resources to be allocated to the segments and assess their performance. As a result, these operating segments represent the Company’s reportable segments. Notwithstanding this structure, the Company internally reports information on a mine-by-mine basis for each mining operation and have chosen to disclose this information on the following tables. Pre-Tax Income (Loss) from reportable segments does not reflect general corporate expenses, interest (except project-specific interest) or income and mining taxes (except for equity investments). Intercompany revenue and expense amounts have been eliminated within each segment in order to report on the basis that management uses internally for evaluating segment performance. Newmont’s business activities that are not considered operating segments are included in Corporate and Other although they are not required to be included in this footnote; they are provided for reconciliation purposes. In the first quarter of 2016, the Merian project moved from Corporate and Other to the South America reportable segment as a result of the mine being included in the operating results and resource allocation of the South America segment. Segment results for prior periods have been retrospectively revised to reflect this change. The financial information relating to the Company’s segments is as follows:

 

9


 

Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

Advanced

  

 

 

 

 

 

 

 

  

 

 

Costs

 

Depreciation

 

Projects, Research

 

PreTax

  

 

  

 

 

 

 

 

Applicable

 

and

 

and Development 

 

Income

 

Capital

 

 

    

Sales

    

to Sales

    

Amortization

    

and Exploration

    

(Loss)

    

Expenditures(1)

 

Three Months Ended March 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carlin

 

$

246

 

$

189

 

$

49

 

$

3

 

$

2

 

$

36

 

Phoenix:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gold

 

 

64

 

 

49

 

 

15

 

 

 

 

 

 

 

 

 

 

Copper

 

 

21

 

 

22

 

 

5

 

 

 

 

 

 

 

 

 

 

Total Phoenix

 

 

85

 

 

71

 

 

20

 

 

 —

 

 

(11)

 

 

4

 

Twin Creeks

 

 

159

 

 

60

 

 

13

 

 

2

 

 

83

 

 

6

 

CC&V (2)

 

 

65

 

 

33

 

 

18

 

 

3

 

 

10

 

 

21

 

Other North America

 

 

 —

 

 

 —

 

 

 —

 

 

7

 

 

(9)

 

 

36

 

North America

 

 

555

 

 

353

 

 

100

 

 

15

 

 

75

 

 

103

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Yanacocha

 

 

211

 

 

128

 

 

69

 

 

9

 

 

(11)

 

 

14

 

Merian

 

 

 —

 

 

 —

 

 

1

 

 

3

 

 

(4)

 

 

82

 

Other South America

 

 

 —

 

 

 —

 

 

3

 

 

6

 

 

(11)

 

 

 —

 

South America

 

 

211

 

 

128

 

 

73

 

 

18

 

 

(26)

 

 

96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boddington:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gold

 

 

204

 

 

111

 

 

23

 

 

 

 

 

 

 

 

 

 

Copper

 

 

30

 

 

23

 

 

5

 

 

 

 

 

 

 

 

 

 

Total Boddington

 

 

234

 

 

134

 

 

28

 

 

 —

 

 

64

 

 

11

 

Tanami

 

 

120

 

 

59

 

 

19

 

 

3

 

 

38

 

 

24

 

Kalgoorlie

 

 

106

 

 

65

 

 

5

 

 

1

 

 

33

 

 

3

 

Batu Hijau:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gold

 

 

283

 

 

100

 

 

20

 

 

 

 

 

 

 

 

 

 

Copper

 

 

287

 

 

130

 

 

26

 

 

 

 

 

 

 

 

 

 

Total Batu Hijau

 

 

570

 

 

230

 

 

46

 

 

1

 

 

282

 

 

10

 

Other Asia Pacific

 

 

 —

 

 

 —

 

 

4

 

 

1

 

 

(5)

 

 

 —

 

Asia Pacific

 

 

1,030

 

 

488

 

 

102

 

 

6

 

 

412

 

 

48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ahafo

 

 

101

 

 

57

 

 

15

 

 

5

 

 

20

 

 

17

 

Akyem

 

 

135

 

 

55

 

 

29

 

 

1

 

 

47

 

 

7

 

Other Africa

 

 

 —

 

 

 —

 

 

 —

 

 

1

 

 

(2)

 

 

 —

 

Africa

 

 

236

 

 

112

 

 

44

 

 

7

 

 

65

 

 

24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate and Other

 

 

 —

 

 

 —

 

 

3

 

 

12

 

 

(36)

 

 

2

 

Consolidated

 

$

2,032

 

$

1,081

 

$

322

 

$

58

 

$

490

 

$

273

 

 


(1)

Includes a decrease in accrued capital expenditures of $24; consolidated capital expenditures on a cash basis were $297.

(2)

On August 3, 2015, the Company acquired the CC&V gold mining business.

10


 

Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

Advanced

  

 

 

 

 

 

 

 

  

 

 

Costs

 

Depreciation

 

Projects, Research

 

PreTax

  

 

  

 

 

 

 

 

Applicable

 

and

 

and Development 

 

Income

 

Capital

 

 

    

Sales

    

to Sales

    

Amortization

    

and Exploration

    

(Loss)

    

Expenditures(1)

 

Three Months Ended March 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carlin

 

$

276

 

$

178

 

$

45

 

$

3

 

$

47

 

$

57

 

Phoenix:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gold

 

 

61

 

 

41

 

 

10

 

 

 

 

 

 

 

 

 

 

Copper

 

 

34

 

 

25

 

 

6

 

 

 

 

 

 

 

 

 

 

Total Phoenix

 

 

95

 

 

66

 

 

16

 

 

1

 

 

8

 

 

7

 

Twin Creeks

 

 

149

 

 

59

 

 

13

 

 

2

 

 

74

 

 

19

 

Other North America

 

 

 —

 

 

 —

 

 

 —

 

 

5

 

 

(1)

 

 

6

 

North America

 

 

520

 

 

303

 

 

74

 

 

11

 

 

128

 

 

89

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Yanacocha

 

 

301

 

 

115

 

 

71

 

 

5

 

 

94

 

 

15

 

Merian

 

 

 —

 

 

 —

 

 

 —

 

 

2

 

 

(2)

 

 

86

 

Other South America

 

 

 —

 

 

 —

 

 

3

 

 

10

 

 

(13)

 

 

 —

 

South America

 

 

301

 

 

115

 

 

74

 

 

17

 

 

79

 

 

101

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boddington:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gold

 

 

239

 

 

157

 

 

30

 

 

 

 

 

 

 

 

 

 

Copper

 

 

47

 

 

39

 

 

7

 

 

 

 

 

 

 

 

 

 

Total Boddington

 

 

286

 

 

196

 

 

37

 

 

1

 

 

58

 

 

11

 

Tanami

 

 

120

 

 

58

 

 

19

 

 

1

 

 

45

 

 

16

 

Waihi (2)

 

 

50

 

 

19

 

 

5

 

 

1

 

 

25

 

 

6

 

Kalgoorlie

 

 

74

 

 

60

 

 

5

 

 

 —

 

 

11

 

 

7

 

Batu Hijau:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gold

 

 

114

 

 

51

 

 

9

 

 

 

 

 

 

 

 

 

 

Copper

 

 

246

 

 

123

 

 

21

 

 

 

 

 

 

 

 

 

 

Total Batu Hijau

 

 

360

 

 

174

 

 

30

 

 

1

 

 

135

 

 

20

 

Other Asia Pacific

 

 

 —

 

 

 —

 

 

4

 

 

1

 

 

(9)

 

 

 —

 

Asia Pacific

 

 

890

 

 

507

 

 

100

 

 

5

 

 

265

 

 

60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ahafo

 

 

121

 

 

56

 

 

15

 

 

6

 

 

44

 

 

21

 

Akyem

 

 

140

 

 

46

 

 

22

 

 

 —

 

 

71

 

 

11

 

Other Africa

 

 

 —

 

 

 —

 

 

 —

 

 

1

 

 

(3)

 

 

 —

 

Africa

 

 

261

 

 

102

 

 

37

 

 

7

 

 

112

 

 

32