10-Q 1 nem-20190331x10q.htm 10-Q nem_Q1_Current folio_10Q

 

 

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, 2019

 

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 GOLDCORP 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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit 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, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12-b2 of the Exchange Act.

 

 

Large accelerated filer

 ☒

 

Accelerated filer

 

Non-accelerated filer

 ☐

(Do not check if a smaller reporting company.)

Smaller reporting company

 

 

 

 

Emerging growth company

 

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

 

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

 

There were 819,633,497 shares of common stock outstanding on April 18, 2019.

 


 

TABLE OF CONTENTS

 

    

 

    

Page

 

 

PART I – FINANCIAL INFORMATION

 

 

FIRST QUARTER 2019 RESULTS AND HIGHLIGHTS 

 

2

ITEM 1. 

 

FINANCIAL STATEMENTS

 

4

 

 

Condensed Consolidated Statements of Operations

 

4

 

 

Condensed Consolidated Statements of Comprehensive Income (Loss) 

 

5

 

 

Condensed Consolidated Statements of Cash Flows

 

6

 

 

Condensed Consolidated Balance Sheets

 

7

 

 

Condensed Consolidated Statements of Changes in Equity

 

8

 

 

Notes to Condensed Consolidated Financial Statements

 

9

ITEM 2. 

 

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

 

43

 

 

Overview

 

43

 

 

Consolidated Financial Results

 

44

 

 

Results of Consolidated Operations

 

49

 

 

Foreign Currency Exchange Rates

 

52

 

 

Liquidity and Capital Resources

 

53

 

 

Environmental

 

55

 

 

Accounting Developments

 

56

 

 

Non-GAAP Financial Measures

 

56

 

 

Safe Harbor Statement

 

64

ITEM 3. 

 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

66

ITEM 4. 

 

CONTROLS AND PROCEDURES

 

67

 

 

 

 

 

 

 

PART II – OTHER INFORMATION

 

 

ITEM 1. 

 

LEGAL PROCEEDINGS

 

68

ITEM 1A. 

 

RISK FACTORS

 

68

ITEM 2. 

 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

69

ITEM 3. 

 

DEFAULTS UPON SENIOR SECURITIES

 

69

ITEM 4. 

 

MINE SAFETY DISCLOSURES

 

70

ITEM 5. 

 

OTHER INFORMATION

 

70

ITEM 6. 

 

EXHIBITS

 

70

SIGNATURES 

 

73

 

 

 

 

 


 

NEWMONT GOLDCORP CORPORATION

FIRST QUARTER 2019 RESULTS AND HIGHLIGHTS

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

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 

 

 

    

2019

    

2018

 

Financial Results:

 

 

 

 

 

 

 

Sales

 

$

1,803

 

$

1,817

 

Gold

 

$

1,739

 

$

1,739

 

Copper

 

$

64

 

$

78

 

Costs applicable to sales (1)

 

$

978

 

$

1,029

 

Gold

 

$

935

 

$

982

 

Copper

 

$

43

 

$

47

 

Net income (loss) from continuing operations 

 

$

145

 

$

169

 

Net income (loss) 

 

$

119

 

$

191

 

Net income (loss) from continuing operations attributable to Newmont stockholders

 

$

113

 

$

170

 

Per common share, diluted:

 

 

 

 

 

 

 

Net income (loss) from continuing operations attributable to Newmont stockholders

 

$

0.21

 

$

0.32

 

Net income (loss) attributable to Newmont stockholders

 

$

0.16

 

$

0.36

 

Adjusted net income (loss) (2)

 

$

176

 

$

185

 

Adjusted net income (loss) per share, diluted (2)

 

$

0.33

 

$

0.35

 

Earnings before interest, taxes and depreciation and amortization (2)

 

$

645

 

$

637

 

Adjusted earnings before interest, taxes and depreciation and amortization (2)

 

$

687

 

$

644

 

Net cash provided by (used in) operating activities of continuing operations

 

$

574

 

$

266

 

Free Cash Flow (2)

 

$

349

 

$

35

 

Cash dividends declared per common share

 

$

0.14

 

$

0.14

 

 

 

 

 

 

 

 

 

Operating Results:

 

 

 

 

 

 

 

Consolidated gold ounces (thousands):

 

 

 

 

 

 

 

Produced

 

 

1,337

 

 

1,286

 

Sold

 

 

1,338

 

 

1,312

 

Attributable gold ounces (thousands):

 

 

 

 

 

 

 

Produced

 

 

1,230

 

 

1,209

 

Sold

 

 

1,234

 

 

1,231

 

Consolidated and attributable copper pounds (millions):

 

 

 

 

 

 

 

Produced

 

 

21

 

 

26

 

Sold

 

 

22

 

 

27

 

Average realized price:

 

 

 

 

 

 

 

Gold (per ounce) 

 

$

1,300

 

$

1,326

 

Copper (per pound) 

 

$

2.89

 

$

2.88

 

Consolidated costs applicable to sales: (1)(2)

 

 

 

 

 

 

 

Gold (per ounce) 

 

$

701

 

$

748

 

Copper (per pound) 

 

$

1.94

 

$

1.74

 

All-in sustaining costs: (2)

 

 

 

 

 

 

 

Gold (per ounce) 

 

$

907

 

$

943

 

Copper (per pound) 

 

$

2.26

 

$

2.07

 


(1)

Excludes Depreciation and amortization and Reclamation and remediation.

(2)

See “Non-GAAP Financial Measures” beginning on page 56.  

 

2


 

First Quarter 2019 Highlights

·

Newmont Goldcorp update: On January 14, 2019, the Company entered into a definitive agreement to acquire all outstanding common shares of Goldcorp Inc. (Goldcorp) in a primarily stock transaction. On April 18, 2019, Newmont closed its acquisition of Goldcorp following receipt of all regulatory approvals and approval by Newmont’s and Goldcorp’s shareholders of the resolutions at the shareholder meetings on April 11 and April 4, 2019, respectively. As of the closing date, the combined company is known as Newmont Goldcorp Corporation, continuing to be traded on the New York Stock Exchange under the ticker NEM and listed on the Toronto Stock Exchange under the ticker NGT. The financial information included in this report represents results of Newmont Mining Corporation prior to the acquisition of Goldcorp. Results for the second quarter 2019 will reflect the financial performance of the combined company from the closing date of the Newmont Goldcorp transaction.

·

Net income (loss): Delivered Net income (loss) from continuing operations attributable to Newmont stockholders of $113 million or $0.21 per diluted share, a decrease of $57 million from the prior-year quarter primarily due to integration and transaction costs associated with the Newmont Goldcorp transaction and Nevada JV Agreement and lower average realized gold prices, partially offset by higher gold production.

·

Adjusted net income (loss): Delivered Adjusted net income (loss) of $176 million or $0.33 per diluted share, a 6% decrease from the prior-year quarter (See “Non-GAAP Financial Measures” beginning on page 56).

·

Adjusted EBITDA: Generated $687 million in Adjusted EBITDA, a 7% increase from the prior-year quarter (See “Non-GAAP Financial Measures” beginning on page 56).  

·

Cash Flow: Reported Net cash provided by operating activities of continuing operations of $574 million, a 116% increase from the prior-year quarter, and free cash flow of $349 million (See “Non-GAAP Financial Measures” beginning on page 56).  

·

Attributable gold production: Increased 2% to 1.23 million ounces primarily due to a full quarter of mining at Subika Underground and higher grade at Merian and Yanacocha, partially offset by reduced mining and lower grade at Kalgoorlie. 

·

Portfolio improvements:  Forged strategic joint venture agreement with Barrick to create the world’s largest gold producing complex by combining the companies’ respective mining operations, assets, reserves, and talent in Nevada; completed Tanami Power Project in Australia safely and on schedule, lowering power costs and carbon emissions by 20 percent.  

·

Financial Strength: Ended the quarter with net debt of $0.8 billion and $3.5 billion cash on hand supporting an investment-grade credit profile; declared a first quarter dividend of $0.14 per share; declared a one-time special dividend of $0.88 per share to be paid on May 1, 2019, to Newmont shareholders of record based on outstanding shares as of April 17, 2019, and not including any shares issued in connection with the recently completed Newmont Goldcorp transaction.  

 

Our global project pipeline

Newmont’s capital-efficient project pipeline supports stable production with improving margins and mine life. Near-term development capital projects are presented below. Funding for Ahafo Mill Expansion and Quecher Main have been approved and these projects are in execution.

Ahafo Mill Expansion, Africa. This project is designed to maximize resource value by improving production margins and accelerating stockpile processing. The project also supports profitable development of Ahafo’s highly prospective underground resources. The expansion is expected to have an average annual gold production of between 75,000 and 100,000 ounces per year for the first five years beginning in 2020. Development capital costs (excluding capitalized interest) since approval were $133, of which $14 related to the first quarter 2019. Both first production and commercial production are expected in the fourth quarter of 2019.

Quecher Main, South America. This project will add oxide production at Yanacocha, leverage existing infrastructure and enable potential future growth at Yanacocha. First production was achieved in late 2018 with commercial production expected in the fourth quarter of 2019. Quecher Main extends the life of the Yanacocha operation to 2027 with average annual gold production of about 200,000 ounces per year (on a consolidated basis) between 2020 and 2025. Development capital costs (excluding capitalized interest) since approval were $126, of which $25 related to the first quarter 2019.

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

3


 

PART I—FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS.

NEWMONT GOLDCORP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in millions except per share)

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 

 

 

    

2019

    

2018

  

Sales (Note 4)

 

$

1,803

 

$

1,817

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

Costs applicable to sales (1) 

 

 

978

 

 

1,029

 

Depreciation and amortization

 

 

312

 

 

301

 

Reclamation and remediation (Note 5)

 

 

30

 

 

28

 

Exploration 

 

 

41

 

 

40

 

Advanced projects, research and development

 

 

27

 

 

34

 

General and administrative 

 

 

59

 

 

59

 

Other expense, net (Note 6)

 

 

68

 

 

11

 

 

 

 

1,515

 

 

1,502

 

Other income (expense):

 

 

 

 

 

 

 

Other income, net (Note 7)

 

 

45

 

 

21

 

Interest expense, net of capitalized interest

 

 

(58)

 

 

(53)

 

 

 

 

(13)

 

 

(32)

 

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

 

 

275

 

 

283

 

Income and mining tax benefit (expense) (Note 8)

 

 

(125)

 

 

(105)

 

Equity income (loss) of affiliates 

 

 

(5)

 

 

(9)

 

Net income (loss) from continuing operations 

 

 

145

 

 

169

 

Net income (loss) from discontinued operations (Note 9)

 

 

(26)

 

 

22

 

Net income (loss)

 

 

119

 

 

191

 

Net loss (income) attributable to noncontrolling interests  (Note 10)

 

 

(32)

 

 

 1

 

Net income (loss) attributable to Newmont stockholders 

 

$

87

 

$

192

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Newmont stockholders:

 

 

 

 

 

 

 

Continuing operations 

 

$

113

 

$

170

 

Discontinued operations 

 

 

(26)

 

 

22

 

 

 

$

87

 

$

192

 

Net income (loss) per common share (Note 11):

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

Continuing operations 

 

$

0.21

 

$

0.32

 

Discontinued operations 

 

 

(0.05)

 

 

0.04

 

 

 

$

0.16

 

$

0.36

 

Diluted:

 

 

 

 

 

 

 

Continuing operations 

 

$

0.21

 

$

0.32

 

Discontinued operations 

 

 

(0.05)

 

 

0.04

 

 

 

$

0.16

 

$

0.36

 


(1)

Excludes Depreciation and amortization and Reclamation and remediation.

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

 

4


 

NEWMONT GOLDCORP CORPORATION 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in millions)

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 

 

 

    

2019

    

2018

    

Net income (loss)

 

$

119

 

$

191

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

Change in marketable securities, net of tax of $- and $-, respectively

 

 

 —

 

 

 2

 

Foreign currency translation adjustments 

 

 

 3

 

 

(3)

 

Change in pension and other post-retirement benefits, net of tax of $- and $(1), respectively

 

 

 4

 

 

 5

 

Change in fair value of cash flow hedge instruments, net of tax of $- and $(1), respectively

 

 

 8

 

 

 4

 

Other comprehensive income (loss)

 

 

15

 

 

 8

 

Comprehensive income (loss)

 

$

134

 

$

199

 

 

 

 

 

 

 

 

 

Comprehensive income (loss) attributable to:

 

 

 

 

 

 

 

Newmont stockholders 

 

$

102

 

$

200

 

Noncontrolling interests

 

 

32

 

 

(1)

 

 

 

$

134

 

$

199

 

 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

5


 

NEWMONT GOLDCORP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

(unaudited, in millions)

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 

 

 

    

2019

    

2018

 

Operating activities:

 

 

 

  

 

 

 

Net income (loss)

    

$

119

  

$

191

 

Adjustments:

 

 

 

  

 

 

 

Depreciation and amortization

 

 

312

  

 

301

 

Stock-based compensation (Note 13)

 

 

19

 

 

19

 

Reclamation and remediation

 

 

27

 

 

26

 

Loss (income) from discontinued operations (Note 9)

 

 

26

 

 

(22)

 

Deferred income taxes

 

 

21

  

 

10

 

Write-downs of inventory and stockpiles and ore on leach pads

 

 

44

 

 

82

 

Other operating adjustments

 

 

(4)

 

 

10

 

Net change in operating assets and liabilities (Note 23)

 

 

10

  

 

(351)

 

Net cash provided by (used in) operating activities of continuing operations

 

 

574

  

 

266

 

Net cash provided by (used in) operating activities of discontinued operations (Note 9)

 

 

(3)

  

 

(3)

 

Net cash provided by (used in) operating activities

 

 

571

  

 

263

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

  

 

 

 

Additions to property, plant and mine development 

 

 

(225)

  

 

(231)

 

Purchases of investments

 

 

(53)

 

 

(6)

 

Other 

 

 

 3

  

 

 1

 

Net cash provided by (used in) investing activities 

 

 

(275)

  

 

(236)

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

  

 

 

 

Dividends paid to common stockholders 

 

 

(76)

  

 

(76)

 

Distributions to noncontrolling interests

 

 

(44)

 

 

(31)

 

Payments for withholding of employee taxes related to stock-based compensation

 

 

(39)

 

 

(39)

 

Funding from noncontrolling interests

 

 

26

 

 

32

 

Payments on lease and other financing obligations

 

 

(10)

 

 

(1)

 

Repurchases of common stock

 

 

 —

 

 

(64)

 

Net cash provided by (used in) financing activities

 

 

(143)

 

 

(179)

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(3)

  

 

 —

 

Net change in cash, cash equivalents and restricted cash

 

 

150

 

 

(152)

 

Cash, cash equivalents and restricted cash at beginning of period 

 

 

3,489

  

 

3,298

 

Cash, cash equivalents and restricted cash at end of period 

 

$

3,639

  

$

3,146

 

 

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,545

 

$

3,111

 

Restricted cash included in Other current assets

 

 

 2

 

 

 1

 

Restricted cash included in Other noncurrent assets

 

 

92

 

 

34

 

Total cash, cash equivalents and restricted cash

 

$

3,639

 

$

3,146

 

 

 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements. 

 

6


 

NEWMONT GOLDCORP CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS 

(unaudited, in millions)

 

 

 

 

 

 

 

 

 

 

   At March 31,    

 

At December 31, 

 

 

    

2019

    

2018

 

ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,545

 

$

3,397

 

Trade receivables (Note 4)

 

 

209

 

 

254

 

Other accounts receivables

 

 

80

 

 

92

 

Investments (Note 16)

 

 

56

 

 

48

 

Inventories (Note 17)

 

 

634

 

 

630

 

Stockpiles and ore on leach pads (Note 18)

 

 

739

 

 

697

 

Other current assets

 

 

134

 

 

159

 

Current assets

 

 

5,397

 

 

5,277

 

Property, plant and mine development, net

 

 

12,264

 

 

12,258

 

Investments (Note 16)

 

 

336

 

 

271

 

Stockpiles and ore on leach pads (Note 18)

 

 

1,835

 

 

1,866

 

Deferred income tax assets

 

 

378

 

 

401

 

Other non-current assets

 

 

670

 

 

642

 

Total assets

 

$

20,880

 

$

20,715

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

Accounts payable

 

$

287

 

$

303

 

Employee-related benefits

 

 

230

 

 

305

 

Income and mining taxes payable

 

 

96

 

 

71

 

Debt (Note 19)

 

 

626

 

 

626

 

Lease and other financing obligations (Note 20)

 

 

59

 

 

27

 

Other current liabilities (Note 21)

 

 

517

 

 

455

 

Current liabilities

 

 

1,815

 

 

1,787

 

Debt (Note 19)

 

 

3,420

 

 

3,418

 

Lease and other financing obligations (Note 20)

 

 

268

 

 

190

 

Reclamation and remediation liabilities (Note 5)

 

 

2,499

 

 

2,481

 

Deferred income tax liabilities

 

 

614

 

 

612

 

Employee-related benefits

 

 

415

 

 

401

 

Other non-current liabilities (Note 21)

 

 

330

 

 

314

 

Total liabilities

 

 

9,361

 

 

9,203

 

 

 

 

 

 

 

 

 

Contingently redeemable noncontrolling interest (Note 10)

 

 

48

 

 

47

 

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

Common stock

 

 

860

 

 

855

 

Treasury Stock

 

 

(109)

 

 

(70)

 

Additional paid-in capital

 

 

9,632

 

 

9,618

 

Accumulated other comprehensive income (loss) (Note 22)

 

 

(269)

 

 

(284)

 

Retained earnings

 

 

385

 

 

383

 

Newmont stockholders' equity

 

 

10,499

 

 

10,502

 

Noncontrolling interests

 

 

972

 

 

963

 

Total equity

 

 

11,471

 

 

11,465

 

Total liabilities and equity

 

$

20,880

 

$

20,715

 

 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

7


 

NEWMONT GOLDCORP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY 

(unaudited, in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

Contingently

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

Other

 

 

 

 

 

 

 

 

 

 

Redeemable

 

 

 

Common Stock

 

Treasury Stock

 

Paid-In

 

Comprehensive

 

Retained

 

Noncontrolling

 

Total

 

Noncontrolling

 

 

    

Shares

    

Amount

    

Shares

    

Amount

 

Capital

    

Income (Loss)

    

Earnings

    

Interests

    

Equity

 

Interest

 

 

 

(in millions)

 

 

 

 

Balance at December 31, 2018

 

535

 

$

855

 

(2)

 

$

(70)

 

$

9,618

 

$

(284)

 

$

383

 

$

963

 

$

11,465

 

$

47

 

Cumulative-effect adjustment of adopting ASU No. 2016-02

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(9)

 

 

 —

 

 

(9)

 

 

 —

 

Net income (loss)

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

87

 

 

31

 

 

118

 

 

 1

 

Other comprehensive income (loss) 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

15

 

 

 —

 

 

 —

 

 

15

 

 

 —

 

Dividends declared (1)

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(76)

 

 

 —

 

 

(76)

 

 

 —

 

Distributions declared to noncontrolling interests

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(44)

 

 

(44)

 

 

 —

 

Cash calls requested from noncontrolling interests (2)

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

22

 

 

22

 

 

 —

 

Withholding of employee taxes related to stock-based compensation

 

 —

 

 

 —

 

(1)

 

 

(39)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(39)

 

 

 —

 

Stock-based awards and related share issuances

 

 2

 

 

 5

 

 —

 

 

 —

 

 

14

 

 

 —

 

 

 —

 

 

 —

 

 

19

 

 

 —

 

Balance at March 31, 2019

 

537

 

$

860

 

(3)

 

$

(109)

 

$

9,632

 

$

(269)

 

$

385

 

$

972

 

$

11,471

 

$

48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

Treasury Stock

 

Paid-In

 

Comprehensive

 

Retained

 

Noncontrolling

 

Total

 

 

    

Shares

    

Amount

    

Shares

    

Amount

 

Capital

    

Income (Loss)

    

Earnings

    

Interests

    

Equity

 

 

 

(in millions)

 

Balance at December 31, 2017

 

534

 

$

855

 

(1)

 

$

(30)

 

$

9,592

 

$

(292)

 

$

410

 

$

984

 

$

11,519

 

Cumulative-effect adjustment of adopting ASU No. 2016-01

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

115

 

 

(115)

 

 

 —

 

 

 —

 

Net income (loss)

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

192

 

 

(1)

 

 

191

 

Other comprehensive income (loss) 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 8

 

 

 —

 

 

 —

 

 

 8

 

Dividends declared (1)

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(76)

 

 

 —

 

 

(76)

 

Distributions declared to noncontrolling interests

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(31)

 

 

(31)

 

Cash calls requested from noncontrolling interests (3)

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

28

 

 

28

 

Repurchase and retirement of common stock

 

(2)

 

 

(3)

 

 —

 

 

 —

 

 

(30)

 

 

 —

 

 

(31)

 

 

 —

 

 

(64)

 

Withholding of employee taxes related to stock-based compensation

 

 —

 

 

 —

 

(1)

 

 

(39)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(39)

 

Stock-based awards and related share issuances

 

 3

 

 

 5

 

 —

 

 

 —

 

 

14

 

 

 —

 

 

 —

 

 

 —

 

 

19

 

Balance at March 31, 2018

 

535

 

$

857

 

(2)

 

$

(69)

 

$

9,576

 

$

(169)

 

$

380

 

$

980

 

$

11,555

 


(1)

Cash dividends declared per common share was $0.14 for the three months ended March 31, 2019 and 2018.

(2)

Cash calls requested from noncontrolling interests of $22 for the three months ended March 31, 2019, represent cash calls requested from Staatsolie for the Merian mine. Staatsolie paid an additional $4 related to prior periods during the three months ended March 31, 2019.

(3)

Cash calls requested from noncontrolling interests of $28 for the three months ended March 31, 2018 represent cash calls requested from Staatsolie for the Merian mine. Staatsolie paid an additional $4 related to prior periods during the three months ended March 31, 2018.

 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

 

 

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Table of Contents

NEWMONT GOLDCORP 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 Goldcorp Corporation, a Delaware corporation, formerly 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 and represent the results of Newmont prior to the acquisition of Goldcorp, Inc. (“Goldcorp”). These interim statements should be read in conjunction with Newmont’s Consolidated Financial Statements for the year ended December 31, 2018, filed on February 21, 2019 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 (“U.S.”) generally accepted accounting principles (“GAAP”) have been condensed or omitted. References to “A$” refers to Australian currency and “C$” refers to Canadian currency.

 

On January 14, 2019, the Company entered into a definitive agreement (as amended by the first amendment to the arrangement agreement, dated as of February 19, 2019, the “Arrangement Agreement”), which closed on April 18, 2019. Under the terms of the Arrangement Agreement, the Company acquired all outstanding common shares of Goldcorp in a primarily stock transaction (the “Newmont Goldcorp transaction”). Goldcorp shareholders received 0.3280 shares of Newmont’s common stock and $0.02 in cash for each Goldcorp common share they owned, valued at $9.4 billion and $17, respectively. At the closing date, the combined company is now known as Newmont Goldcorp Corporation. For further information regarding subsequent events that occurred as a result of closing of the Newmont Goldcorp transaction, see Note 26.

 

On March 10, 2019, the Company entered into an implementation agreement with Barrick Gold Corporation (“Barrick”) to establish a joint venture that will combine certain mining operations and assets located in Nevada and historically included in the Company’s North America reportable segment and certain of Barrick’s Nevada mining operations and assets (the “Nevada JV Agreement”). Pursuant to the terms of the Nevada JV Agreement, Barrick and the Company will hold economic interests in the joint venture equal to 61.5% and 38.5%, respectively. Barrick will operate the joint venture with overall management responsibility and will be subject to the supervision and direction of the joint venture’s Board of Managers, which will be comprised of three managers appointed by Barrick and two managers appointed by Newmont. The Company and Barrick will have an equal number of representatives on the joint venture’s technical, finance and exploration advisory committees. Establishment of the joint venture is subject to the usual conditions, including regulatory approvals, and is expected to be completed in the coming months.

 

In connection with entering into the Nevada JV Agreement, Newmont entered into a mutual two-year standstill agreement with Barrick (the “standstill agreement”). Accordingly, Barrick withdrew its previously announced acquisition proposal for an all-stock acquisition of Newmont and the notice of intent received from a Barrick subsidiary to propose stockholder business at the 2019 annual meeting of stockholders of Newmont. The standstill agreement will terminate two years from the date the joint venture is consummated, or sooner under certain circumstances involving the termination of the Nevada JV Agreement.

.

.

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 and copper. 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 particularly sensitive to the outlook for commodity prices. A decline in the Company’s price outlook from current levels could result in material impairment charges related to these assets.

9


 

Table of Contents

NEWMONT GOLDCORP CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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

 

In addition to changes in commodity prices, other factors such as changes in mine plans, increases in costs, geotechnical failures, and changes in social, environmental or regulatory requirements can adversely affect the Company’s ability to recover its investment in certain assets and result in impairment charges.

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.

Leases

 

The Company adopted Accounting Standards Codification (“ASC”) 842, Leases, on January 1, 2019. Changes to the Company’s accounting policy as a result of adoption are discussed below.

The Company determines if a contractual arrangement represents or contains a lease at inception. Operating leases are included in Other non-current assets and Other current and non-current liabilities in the Consolidated Balance Sheets. Finance leases are included in Property, plant and mine development, net and current and non-current Lease and other financing obligations in the Consolidated Balance Sheets.

Operating and finance lease right-of-use ("ROU") assets and lease liabilities are recognized at the commencement date based on the present value of the future lease payments over the lease term. When the rate implicit to the lease cannot be readily determined, the Company utilizes its incremental borrowing rate in determining the present value of the future lease payments. The incremental borrowing rate is derived from information available at the lease commencement date and represents the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment. The ROU asset includes any lease payments made and lease incentives received prior to the commencement date. Operating lease ROU assets also include any cumulative prepaid or accrued rent when the lease payments are uneven throughout the lease term. The ROU assets and lease liabilities may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. 

The Company has lease arrangements that include both lease and non-lease components. The Company accounts for each separate lease component and its associated non-lease components as a single lease component for the majority of its asset classes.  Additionally, for certain lease arrangements that involve leases of similar assets, the Company applies a portfolio approach to effectively account for the underlying ROU assets and lease liabilities.

Recently Adopted Accounting Pronouncements

Leases

In February 2016, ASU No. 2016-02 was issued which, together with subsequent amendments, is included in ASC 842, Leases. The standard was issued to increase transparency and comparability among organizations by requiring the recognition of ROU assets and lease liabilities on the balance sheet for all leases with an initial term greater than one year. Certain qualitative and quantitative disclosures are also required.

The Company adopted this standard as of January 1, 2019 using the modified retrospective approach. Upon adoption, the Company recognized a cumulative-effect adjustment of $9 to the opening balance of retained earnings. The comparative information has not been adjusted and continues to be reported under the accounting standard in effect for those periods.

The new standard offers a number of optional practical expedients of which the Company elected the following:

10