-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, p712sBDCV/tG1bdspfjsJeelaViPBbgQNrnIQ5dFRonQXpGKS/FBecOo+q7mwqvo QcTOU0BBXAuRfrQ/kIRfjw== 0000950134-94-000288.txt : 19940330 0000950134-94-000288.hdr.sgml : 19940330 ACCESSION NUMBER: 0000950134-94-000288 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEWMONT MINING CORP CENTRAL INDEX KEY: 0000071824 STANDARD INDUSTRIAL CLASSIFICATION: 1040 IRS NUMBER: 131806811 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 001-01153 FILM NUMBER: 94518785 BUSINESS ADDRESS: STREET 1: ONE UNITED BANK CTR STREET 2: 1700 LINCOLN ST CITY: DENVER STATE: CO ZIP: 80203 BUSINESS PHONE: 3038637414 10-K 1 FORM 10-K 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) {X} ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 {FEE REQUIRED} FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993 OR { } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 {NO FEE REQUIRED} FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 1-1153 NEWMONT MINING CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 13-1806811 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 1700 LINCOLN STREET DENVER, COLORADO 80203 (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 863-7414 Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------- --------------------- COMMON STOCK, $1.60 PAR VALUE NEW YORK STOCK EXCHANGE PARIS BOURSE SWISS STOCK EXCHANGES (BASEL-GENEVA-ZURICH)
Securities registered pursuant to Section 12(g) of the Act: NONE 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 X 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. /X/ THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF THE REGISTRANT (BASED ON THE CLOSING SALE PRICE OF THE SHARES ON THE NEW YORK STOCK EXCHANGE) AT MARCH 4, 1994 WAS APPROXIMATELY $3,602,400,000. THE NUMBER OF SHARES OF REGISTRANT'S COMMON STOCK OUTSTANDING AT MARCH 4, 1994 WAS 68,781,715. DOCUMENTS INCORPORATED BY REFERENCE PORTIONS OF REGISTRANT'S DEFINITIVE PROXY STATEMENT TO BE FILED PURSUANT TO REGULATION 14A PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934 FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 12, 1994 (PART III). - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 PART I ITEM 1. BUSINESS INTRODUCTION Newmont Mining Corporation ("Newmont"), incorporated in 1921 under the laws of Delaware, is a U.S. company whose sole asset is a controlling equity interest in Newmont Gold Company ("NGC"). NGC is a worldwide company engaged in gold production, exploration for gold and acquisition of gold properties. Newmont owns 89.22% of the common stock, 100% of the preferred stock and options to purchase additional shares of the common stock of NGC. Due to the transaction described below, effective January 1, 1994 Newmont had no other interests or assets and will conduct no operations in the future. Newmont, together with NGC and NGC's subsidiaries, are referred to herein as the "Corporation." Substantially all of the Corporation's consolidated sales, operating profit and identifiable assets in 1993, 1992 and 1991 were related to NGC's gold mining activities in the United States. Gold sales accounted for substantially all of the Corporation's consolidated sales revenues from continuing operations in 1993, 1992 and 1991. OPERATING SUBSIDIARY GENERAL NGC is Newmont's sole subsidiary or interest. Based on 1993 production as set forth in published reports, NGC is the largest producer of gold from North American operations. In 1993, NGC produced approximately 1.7 million ounces of gold on the Carlin Trend in Nevada. NGC also produces gold through a 38% owned venture in Peru, which commenced operations in August 1993. NGC additionally has a 50% owned joint venture in Uzbekistan and an 80% owned venture in Indonesia, both of which are scheduled to commence gold production in 1995. NGC also owns 100% of Newmont Exploration Limited ("NEL") which, together with various other NGC affiliates, explore worldwide for gold. CARLIN, NEVADA NGC's North American operations are located on the geographical feature known as the Carlin Trend, near Carlin, Nevada. See map on page 5 herein. The Carlin Trend is the largest gold district discovered in North America this century. From the Carlin Trend, NGC produced approximately 1,666,400 ounces in 1993 compared with approximately 1,587,900 ounces in 1992 and approximately 1,576,900 ounces in 1991. Gold production at NGC's Nevada operations is expected to be approximately 1.6 million ounces in 1994. NGC's cash cost of production in Nevada (which is equal to operating costs, excluding general and administrative expense, plus royalties and capitalized mining costs) was $214 per ounce sold in 1993 which, according to published industry sources, was lower than the cash costs associated with approximately two-thirds of all gold produced in the western world in 1992. For 1994, per ounce cash costs at NGC's Nevada operations are expected to increase 5% to 10% over those incurred in 1993. At the end of 1993, NGC had 17.8 million ounces of gold in proven and probable ore reserves on the Carlin Trend. PERU NGC also produces gold through the Minera Yanacocha venture in Peru. Minera Yanacocha S.A. has mining rights with respect to a 63,000 acre land position, which includes the Carachugo deposit and other numerous deposits, located in northwest Peru. See map on page 6 herein. Minera Yanacocha S.A., a Peruvian corporation which controls the multi-deposit project, is 38% owned by NGC; 32.3% by Compania de Minas Buenaventura, S.A. ("Buenaventura"), a Peruvian mining company; 24.7% by an affiliate of Bureau de Recherches Geologiques et Minieres, the geological mining bureau of the French government; and 5% by the International Finance Corporation, which provided $26 million in financing for the project. The project's mining rights were acquired through an assignment of a government concession held by a related entity. The assignment has a term of 20 years, renewable at the option of Minera Yanacocha for another 20 years. The Corporation manages the project and production commenced in August 1993 at the Carachugo deposit. Total project costs with respect to such deposit were approximately $45 million (of which 38% was attributable to 3 NGC). Total proven and probable reserves for the project as of December 31, 1993 were 3,780,000 ounces compared with 1,275,000 ounces as of December 31, 1992. During the final five months of the year, production was 81,500 ounces from the Carachugo mine and production in 1994 is expected to be approximately 220,000 ounces. The 1994 Minera Yanacocha operating plan calls for leaching 13,000 tons of ore per day. Gold recovery is expected to be at 70% to 80% which was the approximate rate of recovery in 1993. The cash cost of production for gold produced in 1993 was approximately $150 per ounce. Contract mining is employed and the power for the project is provided by generators owned by the project. Following the results of continuing exploration, an operating plan incorporating significantly higher levels of production at Minera Yanacocha has been implemented for 1995 than is expected for 1994. Minera Yanacocha is scheduled to commence gold production from the Maqui Maqui deposit at an estimated annual rate of 180,000 ounces at the end of 1994. The additional production from the Maqui Maqui deposit will increase total production in 1995 to approximately 350,000 to 400,000 ounces. The Maqui Maqui deposit is located approximately three miles north of current mining operations at Carachugo. Total capital costs of the expansion of mining operations into the Maqui Maqui deposit are estimated at approximately $40 million which is to be funded from Minera Yanacocha's operating cash flow and borrowings. THE TRANSACTION In a transaction (the "Transaction") effective as of January 1, 1994, NGC acquired all of Newmont's assets, other than 85,850,101 shares of NGC's common stock, par value $0.01 per share (the "NGC Common Stock"), owned by Newmont, and assumed all liabilities (contingent or otherwise) of Newmont, except for Newmont's obligations with respect to the $5.50 convertible preferred stock, par value $5.00 per share, of Newmont (the "NMC Preferred Stock") (other than accrued and unpaid dividends as of December 31, 1993) and employee stock options of Newmont (the "NMC Options") exercisable for the common stock, par value $1.60 per share, of Newmont (the "NMC Common Stock"). The assets of Newmont transferred to NGC consisted of (i) all of the stock of the other subsidiaries of Newmont, (ii) all of Newmont's tangible and intangible personal property, (iii) 8,649,899 shares of NGC Common Stock owned by Newmont and (iv) all other tangible or intangible assets other than the 85,850,101 shares of NGC Common Stock retained by Newmont. As part of the Transaction, NGC (i) issued to Newmont 2,875,000 shares of $5.50 convertible preferred stock, par value $5.00 per share, of NGC (the "NGC Preferred Stock"), with terms identical to the NMC Preferred Stock, except that on conversion Newmont will be entitled to receive shares of NGC Common Stock (instead of NMC Common Stock) and (ii) issued to Newmont options to purchase shares of NGC Common Stock (the "NGC Options") in the same number and with the same exercise prices (after adjusting for the stock split described below) as the NMC Options. As a result of the Transaction, all operating activities of the Corporation will be conducted by NGC and its subsidiaries and Newmont will have no business other than the ownership of the NGC Common Stock, the NGC Preferred Stock and the NGC Options and its obligations with respect to the NMC Preferred Stock and the NMC Options. The Transaction is not expected to have any significant impact on the Corporation's consolidated financial results. In connection with the Transaction, on March 21, 1994, the Board of Directors of Newmont declared a 1.2481 shares for 1 share stock split of the NMC Common Stock (the "Stock Split"), payable in the form of a stock dividend. The amount of the Stock Split was calculated so that the number of shares of NMC Common Stock outstanding following the Stock Split would equal as close as possible the 85,850,101 shares of NGC Common Stock held by Newmont subsequent to the Transaction. GOLD MARKET Gold has two main categories of use -- product fabrication and bullion investment. Fabricated gold has a wide variety of end uses. Purchasers of official coins and high-carat jewelry frequently are motivated by investment considerations, so that net private bullion purchases alone do not necessarily represent the total investment activity in physical gold. The profitability of the Corporation's current operations is significantly affected by the market price of gold. Market gold prices can fluctuate widely and are affected by numerous factors beyond the Corporation's 2 4 control, including industrial and jewelry demand, expectations with respect to the rate of inflation, the strength of the dollar (the currency in which the price of gold is generally quoted) and of other currencies, interest rates, central bank sales, forward sales by producers, global or regional political or economic events and production costs in major gold-producing regions such as South Africa and the former Soviet Union. The demand for and supply of gold affect gold prices, but not necessarily in the same manner as supply and demand may affect the prices of other commodities. The supply of gold consists of a combination of new mine production and existing stocks of bullion and fabricated gold held by governments, public and private financial institutions, industrial organizations and private individuals. As the amounts produced in any single year constitute a very small portion of the total potential supply of gold, normal variations in current production do not necessarily have a significant impact on the supply of gold or on its price. If the Corporation's revenue from gold sales falls for a substantial period below its cost of production at any or all of its operations, the Corporation could determine that it is not economically feasible to continue commercial production at any or all of its operations. The Corporation's costs of production (which are equal to its costs applicable to sales on its income statement) for its Nevada operations were $200 per ounce of gold sold in 1993, $198 in 1992 and $190 in 1991. The volatility of gold prices is illustrated in the following table of annual high, low and average gold fixing prices per ounce on the London Bullion Market:
YEAR HIGH LOW AVERAGE ---- ----- ----- ------- 1984.............................................. $406 $308 $ 360 1985.............................................. 341 284 317 1986.............................................. 438 326 368 1987.............................................. 500 390 446 1988.............................................. 484 395 437 1989.............................................. 416 356 381 1990.............................................. 424 346 383 1991.............................................. 403 344 362 1992.............................................. 360 330 344 1993.............................................. 406 326 360 1994 (through March 4)............................ 395 376 384
- --------------- Source of Data: Metals Week On March 4, 1994, the afternoon fixing for gold on the London Bullion Market was $376 and the spot market price of gold on the New York Commodity Exchange was $378. Gold prices on both the London Bullion Market and the New York Commodity Exchange are regularly published in most major financial publications and many nationally recognized newspapers. REFINING AND MARKETING NGC currently has refining arrangements with four domestic and foreign refiners to further refine dore bullion produced at NGC's refinery located on its Nevada properties. Under the terms of the agreements with these refiners, the gold is toll refined and returned to NGC's account for sale to third parties. Management believes that because of the availability of alternative refiners, each able to supply all services needed by NGC, no adverse effect would result if NGC lost the services of any of its current refiners. In addition to enabling Newmont to reduce its cost of borrowing, a one million ounce gold loan, negotiated in February 1988, which was monetized at $449 an ounce, effectively hedged one million ounces of Newmont's equity in then future gold production against subsequent price declines from $449 per ounce. The gold loan was amortized in sixteen quarterly installments of 62,500 ounces each which commenced in March 1990 and ended in December 1993. During 1992, the gold loan was effectively settled by Newmont entering the forward markets to acquire the gold for the quarterly payments as they became due. See Note 6 to Item 8. To further protect Newmont's gold-derived income against low prices, Newmont conducted a hedging program prior to 1993. This program principally involved put option purchases and a minimal amount of forward sales as well as the sale of call options, the proceeds of which were used to offset the cost of put options. See Item 7 -- "Management's Discussion and Analysis of Results of Operations and Financial Condition" for the financial impacts of the gold loan and hedging program. No hedging transactions are in place or expected to be put in place at the current market prices for gold. Hedging transactions were 3 5 undertaken by Newmont and did not affect price realizations by NGC which has not engaged in hedging activities. However, the Corporation intends for any future hedging activities to be undertaken by NGC. NGC's gold sales generally are made at the monthly average market price prevailing during the month before the gold is delivered plus a "contango" which is essentially an interest factor, from the end of the month until the date of delivery. See Note 11 to Item 8 for information regarding major customers and export sales. EXPLORATION AND DEVELOPMENT GENERAL Worldwide exploration activities are conducted through NEL and certain other NGC affiliates. NEL was responsible for the discovery in 1961 of the Carlin Trend in Nevada. The Corporation also discovered the existence of gold at the Yanacocha deposit in Peru in the 1980s. Management believes that it has one of the largest exploration and development budgets in the minerals industry based on published reports. The Corporation's 1994 budget for exploration and reserve development is $70 million. The Corporation is exploring for gold in other areas which management believes are highly prospective. The Corporation's exploration team is staffed by approximately 250 persons, the majority of whom are geologists, geochemists or geophysicists. CARLIN, NEVADA Carlin Trend -- 100% owned by NGC The Corporation conducts extensive exploration along the Carlin Trend. Prior to the consummation of the Transaction, NGC owned or otherwise controlled the mineral interests on approximately 55 square miles along the Carlin Trend (the "NGC Property"). These 55 square miles contained all of NGC's operating mines and proven and probable reserves as of December 31, 1993. As a result of the Transaction, NGC acquired from Newmont ownership or control of mineral interests on an additional approximately 630 square miles of property along the Carlin Trend (which, together with the NGC Property, is herein referred to as the "Nevada Property"). Ongoing exploration on the Carlin Trend is focused on discovery of new gold deposits and extensions to known deposits and determining through drilling the mineable ore reserves within these deposits. In 1993 exploration by underground methods was initiated to facilitate the possible location of deeper deposits of gold ore. Exploration and development activity on the Carlin Trend in 1993 was consistent with the Corporation's objective to conduct systematic exploration throughout such area, with the purpose of locating and testing all gold prospects, whether oxide or refractory, near-surface or deep. Oxide ore is ore which is amenable to gold extraction through the use of conventional size-reduction processes, such as blasting, crushing and grinding, and the dissolution of the gold in such ore using cyanidation treatment techniques common to the industry. Refractory ore contains minerals which require an additional treatment process, which is normally not necessary with oxide ore, to optimize the recovery of gold. In 1993, a total of 1,067 holes, totalling 649,100 feet, were drilled by the Corporation on the Carlin Trend in connection with reserve development and exploration activities. This compares with approximately 1,264 holes, totalling 816,000 feet, drilled in 1992. In 1993, approximately $26 million was spent by the Corporation on reserve development and exploration on the Carlin Trend. For 1994, reserve development and exploration expenditures on the Carlin Trend are expected to be approximately $28 million. The exploration activities on the Carlin Trend described above include activities conducted in connection with the Ivanhoe Joint Venture. The Ivanhoe Joint Venture consists of approximately 125 square miles of land, held primarily through unpatented mining claims, which lie immediately northwest of NGC's operating mines. A 75% interest in the property was acquired in March 1992 for $20.1 million. The remaining 25% is held by Touchstone Resources Company, a subsidiary of Cornucopia Resources Ltd. The Ivanhoe Joint Venture agreement provides that upon unilateral termination of the agreement by one party, the other party accedes to the interests of the terminating party in the joint venture property. Based on drilling by the Corporation and the prior owners, management believes that the property may have significant potential; however, there can be no assurance that such potential will be realized. 4 6 {INSERT NEVADA MAP -- FULL PAGE} 5 7 PERU Minera Yanacocha S.A. -- 38% owned by NGC Northern Peru Joint Venture -- 65% interest held by NGC Further exploration continues to be conducted at the numerous deposits owned by the Minera Yanacocha venture. See "Operating Subsidiary." In addition, a second Peruvian corporation joint venture in Northern Peru has been formed between NGC and Buenaventura. The joint venture, in which NGC has a 65% interest, has staked claims on 500,000 acres of prospective ground along North and South extensions of the volcanic belt hosting the Yanacocha deposits. Initial exploration work is under way in this prospective area. {INSERT PERU MAP} UZBEKISTAN Zarafshan-Newmont -- 50% owned by NGC In Uzbekistan, one of the Central Asian republics of the former Soviet Union, NGC has a 50/50 joint venture ("Zarafshan-Newmont") with the Uzbekistan State Committee for Geology and Mineral Resources, and Navoi Mining and Metallurgical Combine, state entities of the Republic of Uzbekistan, to produce gold from existing stockpiles of low-grade oxide ore from the Muruntau mine through leaching the ore. Uzbekistan was the second largest gold producer among the republics of the former Soviet Union, accounting for approximately 30% of the former Soviet Union's gold production. These state entities of the Uzbekistan government have guaranteed 242.5 million tons of ore with an average grade of 0.036 ounces of gold per ton, containing approximately 8.7 million ounces of gold. Net recovery is expected to be approximately 4.8 million ounces of gold over the life of the project, 50% of which will be attributable to NGC. The Corporation is managing the Zarafshan-Newmont joint venture. Production is expected to commence in early 1995 at an annual rate of approximately 450,000 ounces. Power for the project is provided by a contractual arrangement with Navoi Mining and Metallurgical Combine, which has its own power-generating facilities. The capital costs are estimated at approximately $150 million, half of which is attributable to NGC. 6 8 The Zarafshan-Newmont joint venture completed a $105 million credit facility for the project in November 1993. See Note 6 to Item 8. The Corporation provided to its joint venture partners such partners' share of the equity capital required for the project in exchange for a portion of the existing stockpiles. See Item 7 -- "Management's Discussion and Analysis of Results of Operations and Financial Condition." The project's gold will be sold in international markets for U.S. dollars. {INSERT UZBEKISTAN MAP} INDONESIA Minahasa -- 80% owned by NGC Batu Hijau -- 80% owned by NGC The Corporation has two advanced gold projects in Indonesia, both of which are 80% owned by NGC with the remainder held by its partner, Mr. Jusuf Merukh, an Indonesian national. Both projects hold mineral rights pursuant to contracts of work with the Republic of Indonesia. Such contracts provide for an eight-year term for exploration and feasibility analysis and a 30-year term for mining. The more advanced of these projects is Minahasa, a multi-deposit project on the island of Sulawesi. The Mesel deposit is scheduled to commence production in late 1995 at an annual rate of approximately 100,000 ounces. Initial cash operating costs have been estimated at approximately $200 an ounce. A preliminary feasibility study of the Mesel deposit was completed on this project in October 1993. The Minahasa project is undergoing further study to achieve 35% of required engineering to determine more precise capital requirements, which preliminarily have been estimated at $100 million. This process is scheduled to be completed by April 1994. Minahasa has six deposits. The project's main deposit, Mesel, has been fully drilled and at the end of 1993 had 1.8 million ounces in proven and probable reserves. It contains both oxidized and refractory gold mineralization, and would require the construction of a small roaster plant, which pretreats refractory ore by oxidizing it prior to milling. There are five additional small gold deposits within a three-mile radius of the Mesel pit which are still undergoing exploratory drilling for assessment purposes. The Minahasa project is in 7 9 close proximity to the coast of Sulawesi and does not present any significant logistical difficulties for transportation of materials and equipment. The second Indonesian project is the Batu Hijau deposit, on the island of Sumbawa. Batu Hijau is a porphyry gold/copper deposit that was discovered in 1990. While the economics of the deposit have not been determined, it is one of the largest single occurrences of gold mineralization ever discovered by the Corporation. It is located 10 miles from the island's coast, and has access to natural harbors which can be developed for transportation of materials and equipment. Seventy-nine holes have been drilled in this deposit to an average depth of 1,500 feet. A preliminary feasibility study has been completed and a full feasibility study is anticipated to commence in late 1994 to determine the economic potential of the property. Batu Hijau is considered to have significant potential, although there can be no assurance that such potential could or will be realized. {INSERT INDONESIAN MAP} NORTHWESTERN UNITED STATES Grassy Mountain -- Vale, Oregon -- 100% interest held by NGC Musgrove Creek, Idaho -- 100% interest held by NGC The Corporation owns the exploration, development and mining rights on two properties acquired from Atlas Corporation ("Atlas") -- Grassy Mountain in Malheur County, Oregon, and Musgrove Creek in Lemhi County, Idaho. The rights were acquired in October 1992 through two 35-year leases, each with options for three 10-year extensions. The total lease payment was $22.5 million, which has been fully paid, plus a 5% royalty on production from Grassy Mountain against which an advance payment of $7.5 million was made. The Grassy Mountain project was drilled extensively by Atlas. The drilling has delineated an oxide ore gold deposit containing 995,900 ounces of gold and 2,467,000 ounces of silver. These reserves are contained in approximately 16 million tons of ore at an average grade of 0.062 ounces of gold per ton. The development plan prepared by Atlas for Grassy Mountain contemplated production of approximately 100,000 ounces of gold annually, at an estimated average operating cost over the life of the mine of approximately $150 to $200 per ounce. The Corporation is undertaking an engineering and geological review of the Atlas plan, which could increase or decrease the reserves, or alter the production schedule and/or costs. Subject to the results of these 8 10 studies and obtaining necessary permits, production could begin in 1997. Further, the Corporation has begun limited exploration efforts on the Grassy Mountain property in areas outside the Atlas reserve. The 43 square miles of land which make up the Grassy Mountain property are considered to have significant additional potential, although there can be no assurance that such potential will be realized until further geological work is complete. {INSERT GRASSY MOUNTAIN MAP} The Musgrove Creek prospect in Idaho, which covers approximately 24 square miles, is in the very early stages of exploration, but management believes the exploration potential appears promising based on results from a limited drilling program by Atlas and subsequent exploration and drilling by the Corporation. LAOS Newmont Viengkham Limited -- 93% owned by NGC NGC has a 93% interest in a joint venture for exploration in Laos. This joint venture agreement covers approximately 2,500 square miles of land which management believes is highly prospective. OTHER In addition to the exploratory projects specifically discussed above, the Corporation is in the preliminary stages of exploration and/or joint venture discussions in other parts of the world, including Chile, Ecuador, Mexico and Canada. There can be no assurances that any of these activities by the Corporation will result in any new joint ventures or other projects or that such new joint ventures or projects would result in profitable operations. 9 11 ENVIRONMENTAL MATTERS GENERAL The Corporation's United States gold mining and processing operations are subject to extensive federal, state and local governmental regulations for the protection of the environment, including such as relate to the protection of air and water quality and mine reclamation, and for the promotion of mine and occupational safety. Management believes that these regulations have not had, and will not in the future have, a materially more severe impact on the Corporation's United States operations than is experienced by other gold mining companies in the United States. Management does not believe that compliance with such regulations will have a material adverse effect on its competitive position. At this time the Corporation does not expect any material impact on future recurring operating costs of compliance with currently enacted environmental regulations. Ongoing costs to comply with environmental obligations have not been significant to the Corporation's total costs of operations. Since the Corporation is not able to pass on any net increases in costs to its customers, any such increases could have an effect on future profitability of the Corporation depending upon the price of gold. Amendments to current laws and regulations governing operations and activities of mining companies or the stringent implementation thereof could have a material adverse impact on the Corporation in terms of increased capital and operating expenditures. The Corporation's operations outside of the United States are also subject to governmental regulations for the protection of the environment. Management believes that these regulations have not had, and will not have, a materially adverse effect on the Corporation's operations or its competitive position. The adoption of new laws or regulations, or amendments to current laws or regulations, regarding the operations and activities of mining companies could have a material adverse impact on the Corporation's capital and operating expenditures. It is estimated that compliance with regulations for the protection of the environment will require capital expenditures of approximately $3 million in 1994 in connection with the Zarafshan-Newmont joint venture and a total of approximately $5 to $10 million in 1994, 1995 and 1996 in connection with the Minahasa project in Indonesia. NEVADA OPERATIONS The Corporation's Nevada gold mining and processing operations generate solid waste which is subject to regulation under the federal Resource Conservation and Recovery Act ("RCRA") and similar laws of the State of Nevada. Solid waste that is considered "hazardous" is subject to extensive regulation by the U.S. Environmental Protection Agency (the "EPA") and the State of Nevada under Subtitle C of RCRA, while non-hazardous solid waste is governed by a less stringent program under Subtitle D of RCRA and solid waste management regulations of the State of Nevada. A 1980 amendment to RCRA temporarily excluded from Subtitle C regulation all solid waste from the "extraction, beneficiation, and processing of ores and minerals," until at least six months after the submission to Congress by the EPA of a study of such wastes and promulgation by the EPA of appropriate regulations. The EPA's study of "extraction" and "beneficiation" wastes from mining operations was submitted to Congress at the end of 1985. Six months later the EPA issued a determination that the regulation of such wastes under Subtitle C of RCRA was not warranted, and that it intended to develop specific regulations for such wastes under Subtitle D. The process of developing such regulations under Subtitle D has been underway since mid-1986. The Corporation is participating in that process. The EPA has indicated that the regulations for these wastes will be more stringent than the current Subtitle D program but less stringent than the hazardous waste regulations under Subtitle C. At the present time, however, there is not a sufficient basis to accurately predict the potential impacts of such regulations on the Corporation. With regard to wastes from the "processing" of ores and minerals (including refining wastes), the EPA adopted an interpretation of the exclusion of such wastes from Subtitle C regulation to limit it only to certain very high volume wastes. This interpretation became effective in the State of Nevada in August 1990. However, due to the fact that NGC recycles all potentially hazardous secondary materials generated during refining operations, this interpretation has not had, and is not expected to have, any material impact on the Corporation's operations. The Corporation's Nevada operations are subject to stringent state permitting regulations for protection of surface and ground water, as well as wildlife. These regulations address the design, construction, operation 10 12 and closure of mining facilities, and may require additional capital and operating expenditures for current operations, expansions and development of new projects. Requirements for the closure and reclamation of pits, tailings impoundments and leaching facilities may significantly increase costs when these operations are closed. New procedural requirements may result in substantial delays when bringing new projects into production and when modifying or expanding existing operations. The Corporation's gold mining operations have the potential to produce fugitive dust, primarily from unpaved roads and material handling. These fugitive dust emissions are controlled by the use of water with chemical binders as a dust suppressant. Fugitive dust emissions are subject to regulation under the laws of the State of Nevada. The EPA's current regulations under the federal Clean Air Act exclude fugitive dust from surface mines in determining whether new or expanded sources need permits for construction under the regulations for prevention of significant deterioration ("PSD") of air quality. Extensive amendments to the federal Clean Air Act were enacted by Congress in late 1990. These amendments could ultimately increase the Corporation's compliance costs for air pollution permitting and/or control at its gold mining operations, but the impact on such operations is so dependent on future regulations and other contingencies that it cannot reasonably be predicted at this time. It is estimated that with respect to the Corporation's U.S. operations, compliance with federal, state and local regulations relating to the discharge of material into the environment, or otherwise relating to the protection of the environment, required capital expenditures of approximately $66 million in 1993, primarily as part of the construction of the Corporation's refractory ore treatment plant (see Item 2 -- "Refractory Ore Treatment Plant at Carlin"), and will require approximately $85 to $90 million of such capital expenditures in 1994, again largely due to the construction of the refractory ore treatment plant. Thereafter, annual capital expenditures for such compliance measures are expected to be less than $20 million. ENVIRONMENTAL LIABILITIES The Corporation is involved in several matters concerning environmental liabilities primarily associated with former mining activities of three subsidiaries of NGC (which were acquired from NMC in the Transaction) -- Idarado Mining Company ("Idarado") in the State of Colorado, Resurrection Mining Company ("Resurrection") in the State of Colorado and Dawn Mining Company ("Dawn") in the State of Washington. Idarado is an 80.1% owned subsidiary of NGC. In 1992, Idarado and Newmont entered into a consent decree to settle a lawsuit brought by the State of Colorado against them under the Comprehensive Environmental Response, Compensation and Liability Act, generally referred to as the "Superfund Act." As well as settling natural resource damages and past and future response costs, Idarado agreed in the consent decree to undertake specified reclamation and remediation work, including ongoing care, maintenance and monitoring costs related to its former mining activities in the Telluride/Ouray area of Colorado. Resurrection is a wholly owned subsidiary of NGC and is a partner in a mining joint venture with ASARCO Incorporated ("ASARCO") near Leadville, Colorado. Resurrection, Newmont, the joint venture and ASARCO are defendants in a lawsuit brought under the Superfund Act. The proceedings seek to compel the defendants to remediate the impacts of pre-existing mining activities which are alleged to be causing substantial environmental problems in the Leadville area. The Corporation is currently actively negotiating with the EPA, the State of Colorado and ASARCO to develop a reclamation and remediation plan for the site and to specify the financial obligations of the involved parties. In addition to costs of remedial action, the state and federal governments will seek to recover past and future response costs to be incurred at the site and may seek to recover damages for natural resources. The full extent of the costs to be incurred in this matter cannot yet be determined. For additional information on this matter, see Item 3 -- "Legal Proceedings." Dawn is 51% owned by NGC. Dawn leased a currently inactive open-pit uranium mine near Spokane, Washington and also owns a nearby uranium millsite facility. Dawn does not presently have sufficient funds to pay for reclaiming the leased land or to pay for the closure of its mill. Dawn has submitted to the State of Washington a mill closure plan which could potentially generate the necessary funds to reclaim the mine and the mill. At the request of the State of Washington, Dawn is presently doing detailed engineering for the plan. A formal decision on the plan by the State of Washington is not expected before the fourth quarter of 1994. If Dawn is not able to fund the mine and mill closure costs, the U.S. Department of Interior has notified Dawn that it would seek to hold Dawn and Newmont liable for any costs incurred as a result of Dawn's failure to 11 13 comply with the lease and applicable regulations for such closure. The Corporation intends to vigorously contest any such claims. At December 31, 1993, $62.7 million was accrued with respect to these matters. Depending upon the ultimate resolution of these matters, management believes that it is reasonably possible that the liability for these matters could be as much as 60% greater or 20% lower than this amount. In addition, at December 31, 1993, $42.2 million was recorded as a receivable from third parties for costs previously expended in connection with these matters and for the future liabilities estimated in connection with these matters. The third parties involved are primarily insurance carriers, who have reserved their rights or disclaimed liability under their respective policies. Certain carriers have commenced declaratory judgment actions seeking a determination that the claims are not covered. The Corporation is negotiating with some of the carriers for recovery of past and future costs relating to certain of the environmental matters herein discussed. Newmont has also had preliminary settlement negotiations with the entire group of insurance carriers; however, these discussions are preliminary and the Corporation cannot reasonably predict the outcome of these negotiations at this time. In addition, the Corporation has instituted suit against certain of the insurance carriers in the state courts of Colorado seeking a judicial declaration that those insurance carriers are jointly and severally liable to the Corporation for all costs and damages that the Corporation has incurred or which the Corporation may incur in the future in connection with the Idarado consent decree described above. The Corporation cannot reasonably predict the outcome of this action at this time. The total receivables recorded as of December 31, 1993 represents a reasonably probable amount the Corporation expects to receive based upon its discussions with counsel. Although the Corporation cannot reasonably predict the outcome of its negotiations with the insurance carriers, it believes that ultimately a recovery of claimed costs will be made from the insurance carriers. For additional information on these environmental liabilities, see Notes 9 and 13 to Item 8. GENERAL The Corporation does not hold material patents or other material licenses, franchises or concessions in connection with its business. Capital expenditures incurred by the Corporation for continuing operations were approximately $235 million, $213 million and $96 million in 1993, 1992 and 1991, respectively. There were 2,370 persons employed by the Corporation at December 31, 1993. ITEM 2. PROPERTIES PRODUCTION CARLIN, NEVADA -- 100% OWNED BY NGC The Corporation's operations along the Carlin Trend are divided geographically into three management areas: the North Area which includes the Post, Carlin and Genesis mines and Mills No. 1 and No. 4; the South Area which includes the Gold Quarry mine and Mills No. 2 and No. 5; and the Rain Area which includes the Rain mine and Mill No. 3. Each of these areas has a leach facility. See map on page 5 herein. In 1993, ore was produced from five open-pit mines -- Genesis, Post, Carlin, Gold Quarry and Rain. It is expected that the Rain mine will be decommissioned in late 1994 when its ore reserves are fully depleted. The Post mine is being mined by Barrick Goldstrike Mines, Inc. ("Barrick") under a joint mining agreement executed in December 1992 by NGC and Barrick for the exploitation of the shared Post deposit and other related matters. The lower and deep zones of this ore body contain approximately 9.25 million ounces of gold, of which NGC owns 4.88 million ounces and Barrick the remaining 4.37 million ounces. The parties will share the cost of mining the ore body in proportion to their interests in the contained gold. NGC will benefit from lower costs of mining than if it had separately mined its portion of the Post ore body. See Item 7 -- 12 14 "Management's Discussion and Analysis of Results of Operations and Financial Condition." See map on page 5 herein. MINE PRODUCTION DRY SHORT TONS (000S)
1993 1992 ----------------------------------------- ---------------------------------------- MILL LEACH MILL LEACH ORE ORE WASTE TOTAL ORE ORE WASTE TOTAL ------ ------ ------- ------- ------ ------ ------ ------- North Area -- Genesis.............. 2,336 12,704 50,413 65,453 690 10,383 31,449 42,522 -- Carlin............... 64 2,789 3,929 6,782 77 1,409 2,073 3,559 -- Post................. 420 1,066 15,188 16,674 1,845 6,190 6,616 14,651 ------ ------ ------- ------- ------ ------ ------ ------- 2,820 16,559 69,530 88,909 2,612 17,982 40,138 60,732 South Area -- Gold Quarry.......... 11,005 36,760 56,283 104,048 10,364 22,141 47,107 79,612 Rain Area -- Rain.................. 1,049 2,951 7,758 11,758 901 1,700 10,268 12,869 ------ ------ ------- ------- ------ ------ ------ ------- Total...................... 14,874 56,270 133,571 204,715 13,877 41,823 97,513 153,213 ------ ------ ------- ------- ------ ------ ------ ------- ------ ------ ------- ------- ------ ------ ------ -------
The Corporation has an established program for the maintenance and repair of its equipment and facilities. Management believes that the Corporation's facilities are generally in a state of good repair. The Corporation has a continuous program of capital investment that includes, as necessary or advisable, the replacement, modernization or expansion of its equipment and facilities. For a discussion of anticipated future capital expenditures at the Corporation's Nevada operations, see Item 7 -- "Management's Discussion and Analysis of Results of Operations and Financial Condition." Power for the Corporation's Nevada operations is provided by public utilities. With the principal exception of its Gold Quarry and Rain properties, NGC's Nevada properties are owned primarily in fee, having been acquired from the United States by mineral patents and from others. NGC owns in fee or controls through long-term mining leases and unpatented mining claims all of the minerals and surface area within the boundaries of the present and projected mining areas of the Gold Quarry property. Such long-term leases extend for at least the anticipated life of the mine. In a substantial portion of such present and projected mining areas, NGC owns a 10% undivided interest in the minerals and with respect to the remaining 90% has agreed to pay a royalty to third party lessors that is equivalent to approximately 18% of production therefrom. NGC also has less significant royalty commitments to other parties with respect to other portions of the Gold Quarry property and certain of its other properties, notably Rain. See Item 7 -- "Management's Discussion and Analysis of Results of Operations and Financial Condition." The U.S. Congress is considering various proposed amendments, including proposals supported by the Clinton Administration, to the General Mining Law of 1872, which governs mining claims and related activities on federal public lands. Among other things, these proposals would impose royalties on gold production from claims on federal lands. Approximately 94% of NGC's proven and probable ore reserves in Nevada are located on private land and, therefore, not potentially subject to such government proposals to impose a royalty on gold production from federal lands. Mill Facilities at Carlin Mill No. 1 was built in 1965 and has treated ore from mines in the North Area such as Carlin, Genesis and Post. It treated an average of 2,600 tons per day of refractory and oxide ores in 1993. The treatment processes include primary and secondary crushing, grinding and cyanide leaching with gold recovery onto activated carbon using a carbon-in-pulp ("CIP") circuit. Mill No. 1 also contains a chlorination pre-treatment circuit for the processing of carbonaceous refractory gold ores. After pre-treatment, the ore pulp is combined with the oxide ore pulp for cyanide leaching with gold recovery onto activated carbon. The gold is then stripped from the carbon and refined to ore at NGC's refinery. Mill No. 2 was commissioned in 1985 and is located in the South Area adjacent to the Gold Quarry open pit mine. It treated an average of 9,200 tons per day of oxide ore in 1993. The treatment processes consist of primary crushing, semi-autogenous grinding and cyanide leaching with gold recovery by CIP and carbon-in-column ("CIC") technologies. Mill No. 2 will be taken out of service in 1994, once the refractory ore 13 15 treatment plant becomes fully operational, which is expected to occur in the third quarter of 1994. See "Refractory Ore Treatment Plant at Carlin." Mill No. 3 was commissioned in 1988 and is located in the Rain Area some thirteen miles southeast of the town of Carlin, Nevada. In 1993, it treated an average of 2,500 tons of oxide ore per day. The treatment processes consist of primary and secondary crushing, a grinding circuit and cyanide leaching with gold recovery onto activated carbon through the use of a CIP circuit. This mill is expected to be decommissioned in late 1994 when the Rain Mine ore reserves are fully depleted. Mill No. 4 was commissioned in 1989 and is located in the North Area approximately one mile northeast of the Post deposit. In 1993, it treated an average of 7,400 tons of oxide ore per day from the Post and Genesis mines. The treatment process is similar to Mill No. 2, but instead of a leach tank and CIP circuit, carbon-in-leach ("CIL") and CIC circuits are in place. Mill No. 5 was commissioned in 1988 and is located in the South Area adjacent to Mill No. 2. In 1993, it treated an average of 17,600 tons of oxide ore per day. The treatment process is similar to Mill No. 4. MILL PRODUCTION
1993 1992 ------------------------------------------ ------------------------------------------ DRY SHORT GRADE DRY SHORT GRADE TONS (OUNCES OUNCES TONS (OUNCES OUNCES MILLED PER INDICATED PRODUCED MILLED PER INDICATED PRODUCED (000S) TON) RECOVERY (000S) (000S) TON) RECOVERY (000S) --------- ------- --------- -------- --------- ------- --------- -------- Mill No. 1 -- North Area......... 960 0.094 85.6% 82.5 562 0.087 82.7% 40.9 Mill No. 2 -- South Area......... 3,368 0.090 81.4% 239.2 3,652 0.083 80.4% 238.1 Mill No. 3 -- Rain Area.......... 903 0.101 85.7% 77.0 903 0.118 85.3% 95.9 Mill No. 4 -- North Area......... 2,692 0.111 84.9% 252.5 2,416 0.114 85.0% 241.2 Mill No. 5 -- South Area......... 6,419 0.081 80.5% 412.3 6,231 0.084 79.7% 417.3 --------- -------- --------- -------- Tota1.................... 14,342 0.091 82.4% 1,063.5 13,764 0.091 81.6% 1,033.4 --------- -------- --------- -------- --------- -------- --------- --------
Refractory Ore Treatment Plant at Carlin NGC is building a low-temperature roaster plant to oxidize refractory ores in conjunction with existing milling facilities in the South Area of operations on the Carlin Trend. This modern roaster, which is scheduled to be completed in the third quarter of 1994, will be capable of treating 8,000 tons of ore per day and is expected to cost approximately $300 million which is to be funded from cash balances, operating cash flow and borrowings. The plant will enable NGC to oxidize and treat higher grades of refractory ores that contain both sulfides and active carbon. While the capital costs per ton of capacity for a roaster are higher than those of an autoclave (an oxidation process in which high temperatures and pressures are applied to convert refractory sulfidic mineralization into cyanide amenable oxide ore), the nearest alternative process for mill-grade refractory ore, the roaster's operating costs per ton are expected to be lower than the costs of operating an autoclave. Autoclaves, furthermore, will not treat ores containing active carbon, as do modern roasters. Leaching Facilities at Carlin Processing at the Carlin leaching operations consists of crushing, dump leaching and carbon adsorption facilities. The ore is hauled from the mines to crushing plants for size reduction. The ore is then agglomerated with cement at a controlled moisture content and stacked on impermeable pads. Leach ore which is mined in excess of crushing capacity is placed directly on the leach pads, without first being crushed, to avoid stockpile rehandling costs. The ore is then leached with a low concentration cyanide solution. The gold leaching solutions are collected and passed through columns of activated carbon wherein the removal of gold is accomplished by adsorption. The barren solutions are then returned for re-use in the process. Gold recovery from carbon is accomplished at a central carbon handling facility. See "Other Facilities at Carlin." The South Area leach facility, commissioned in 1989, was expanded during 1991 and 1992. The North Area leach facility 14 16 was commissioned in 1988 and expanded in 1991, 1992 and 1993. In 1994 expansions are planned in both the North and South Areas. The Rain Area leach facility was commissioned in 1988. LEACH PRODUCTION
1993 1992 ------------------------------------ ------------------------------------ DRY SHORT DRY SHORT TONS GRADE OUNCES TONS GRADE OUNCES PLACED (OUNCES PRODUCED(1) PLACED (OUNCES PRODUCED(1) (000S) PER TON) (000S) (000S) PER TON) (000S) --------- -------- ----------- --------- -------- ----------- North Area................................. 19,466 0.019 235.7 20,532 0.024 263.7 South Area................................. 36,557 0.019 344.3 21,366 0.020 272.4 Rain Area.................................. 2,922 0.021 22.9 1,897 0.022 18.4 --------- ----- --------- ----------- Tota1.............................. 58,945 0.019 602.9 43,795 0.022 554.5 --------- ----- --------- ----------- --------- ----- --------- -----------
- --------------- (1) Leach recovery from tons placed fluctuates from year-to-year due to ore grade, differing solution application rates, cycle times, as well as varying inventories of unleached material placed on pads. Bioleaching at Carlin As an extension of its current leaching operations, field tests have confirmed the commercial viability of a patented bioleaching process to recover gold from low-grade sulfidic materials that previously could not be treated economically. The Corporation's patented process has proved economic on low-grade sulfidic material that already has been mined as a consequence of activity to recover higher-grade sulfidic material or oxidized ores. In the bioleaching process, high-density cultures of naturally occurring bacteria are added to low-grade ore as it is placed on leach pads. The bacteria break down the sulfide crystal structure in the ore, allowing the gold subsequently to be dissolved and recovered through normal heap leaching processes. NGC has a second bioleaching process under longer-range commercial tests which is aimed at recovering gold from low-grade sulfidic material that contains active carbon. Such carbon currently prevents economic recovery of contained gold by absorbing gold from the solution into which it has been dissolved. NGC has an agreement with Barrick which could allow NGC the opportunity to treat and recover gold from Barrick's low-grade refractory material. If the patented bioleaching process has commercial applicability to Barrick's material, NGC could construct and operate a facility for such treatment in return for a 50% share of the profits, after recovery of capital. Other Facilities at Carlin As discussed above, all of the Corporation's Carlin milling and leaching plants recover gold onto activated carbon. The gold-bearing activated carbon from all of these plants is processed at the central carbon processing plant located in the South Area of operations. The gold is stripped from the gold-bearing carbon into a solution which is then subjected to an electrowining process at the refinery, located near the carbon handling plant. After the gold is stripped from the carbon at the carbon processing plant, the carbon is then "re-activated" and returned to the various milling and leaching facilities for reuse. The refinery also includes a retorting process to remove mercury, which would otherwise be vaporized and released to the atmosphere, from the electrowining product. The mercury is sold as a by-product. The refinery produces dore bullion which typically has a gold and silver content of 85% to 95%. This dore bullion is then sent to custom toll refiners who further refine the dore and recover the gold and silver at, typically, a pureness of 99.99%. The refinery, analytical laboratory and administration offices are located in the vicinity of Mills Nos. 2 and 5 in the South Area. The Corporation also has an advanced metallurgical research laboratory in Salt Lake City, Utah. MINERA YANACOCHA -- 38% OWNED BY NGC Minera Yanacocha commenced production in August 1993. During the final five months of the year, it produced a total of 81,500 ounces of gold from the Carachugo mine. This was equivalent to an annual rate of approximately 220,000 ounces. The Maqui Maqui deposit is expected to commence production at a rate of approximately 180,000 ounces of gold annually at the end of 1994. Minera Yanacocha's total production is expected to be approximately 350,000 to 400,000 ounces in 1995. 15 17 PROVEN AND PROBABLE ORE RESERVES Newmont's equity in the proven and probable reserves of NGC and its subsidiaries, on a pro forma basis giving effect to the Transaction, was approximately 23,177,000 ounces and 21,194,000 ounces of gold at December 31, 1993 and December 31, 1992, respectively. CARLIN, NEVADA NGC's estimate of the proven and probable ore reserves at Carlin, Nevada at December 31, 1993 and 1992 is set forth in the table below. The proven and probable reserves were determined by the use of mapping, drilling, sampling, assaying and evaluation methods generally applied in the mining industry. Calculations with respect to the estimates as of December 31, 1993 and 1992, are based on a gold price of $400 per ounce. NGC's management believes that if its reserve estimates were to be based on gold prices as low as $300 per ounce with current operating costs, 1993 year-end reserves would decrease by approximately 16%. Conversely, if its reserve estimates were to be based on a gold price of $500 per ounce with current operating costs, 1993 year-end reserves would increase by approximately 19%. These reserves represent the total quantity of ore to be extracted from the deposits or stockpiles, allowing for mining efficiencies and ore dilution.
DECEMBER 31, 1993 DECEMBER 31, 1992 -------------------------------------- -------------------------------------- DRY SHORT GRADE CONTAINED DRY SHORT GRADE CONTAINED DEPOSITS WITH PROVEN AND PROBABLE TONS(2)(3) (OUNCES OUNCES(5) TONS(2)(3) (OUNCES OUNCES(5) RESERVES(1) (000S) PER TON)(4) (000S) (000S) PER TON)(4) (000S) - ------------------------------------ ---------- ----------- --------- ---------- ----------- --------- North Area Capstone/Bootstrap................ 22,956 0.037 838 22,956 0.037 838 Carlin............................ 2,069 0.034 71 9,119 0.028 256 Deep Star......................... 849 0.929 789 849 0.929 789 Genesis........................... 65,875 0.032 2,090 74,493 0.032 2,358 North Star(6)..................... -- -- -- 5,700 0.035 200 Pete.............................. 6,423 0.026 169 6,423 0.026 169 Post.............................. 30,812 0.169 5,217 32,589 0.162 5,264 Tara.............................. 5,133 0.057 292 -- -- -- Stockpiles........................ 9,488 0.034 321 11,404 0.039 440 ---------- --------- ---------- --------- 143,605 0.068 9,787 163,533 0.063 10,314 ---------- --------- ---------- --------- South Area Gold Quarry....................... 145,189 0.041 5,906 179,915 0.041 7,299 MAC............................... 5,677 0.016 89 5,677 0.016 89 Tusc.............................. 13,378 0.062 827 13,378 0.062 827 Stockpiles........................ 18,463 0.046 849 9,566 0.050 479 ---------- --------- ---------- --------- 182,707 0.042 7,671 208,536 0.042 8,694 ---------- --------- ---------- --------- Rain Area Emigrant Springs.................. 4,864 0.035 169 4,853 0.035 168 Rain/SMZ.......................... 979 0.054 53 4,575 0.050 227 Stockpiles........................ 2,830 0.031 89 1,776 0.032 57 ---------- --------- ---------- --------- 8,673 0.036 311 11,204 0.040 452 ---------- --------- ---------- --------- 334,985 0.053 17,769(7) 383,273 0.051 19,460 ---------- --------- ---------- --------- ---------- --------- ---------- --------- Newmont Mining's pro forma equity in contained ounces(89.22%).............................................. 15,854 17,362 --------- --------- --------- ---------
- --------------- (1) The term "reserve" means that part of a mineral deposit which can be reasonably assumed to be economically and legally extracted or produced at the time of the reserve determination. The term "economically," as used in the definition of reserve, implies that profitable extraction or production under defined investment assumptions has been established or analytically demonstrated. The assumptions made must be reasonable, including assumptions concerning the prices and costs that will prevail during the life of the project. 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, there should not be any significant uncertainty concerning issuance of these permits or resolution of legal issues. 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 result 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. 16 18 (2) Represents the total quantity of ore to be extracted from each deposit or stockpile, allowing for mining efficiencies and ore dilution. (3) Calculated using cutoff grades for 1993 and 1992 as follows: oxide leach material not less than 0.006 ounce per ton; refractory mill material not less than 0.07 ounce per ton; oxide mill material varies. Ore reserves were calculated using different recoveries depending on each deposit's metallurgical properties and process. The average oxide mill recoveries utilized were as follows (1992 values in parenthesis): Mill No. 1 -- 85% (85%); Mill No. 2 -- 85% (85%); Mill No. 3 -- 86% (86%); Mill No. 4 -- 82% (84%); Mill No. 5 -- 85% (85%). The average refractory mill recoveries utilized were: Mill No. 1 -- 85% (85%). Roaster -- (engineered estimate) 88% (88%). The following average leach recoveries utilized were used for oxide material: North Area -- 65% (66%); South Area -- 70% (70%); Rain Area -- 56% (57%). The term "cut-off grade" means the lowest grade of mineralized rock that qualifies as ore in a given deposit. Cut-off grades vary between deposits depending upon prevailing economic conditions, mineability of the deposit, amenability of the ore to gold extraction, and milling or leaching facilities available. (4) The stated average grade (ounces per ton) may not correspond to that determined by direct calculation due to rounding. (5) Contained ounces are prior to any losses during metallurgical treatment. (6) North Star's 1993 year-end reserves are included with the 1993 year-end Genesis reserves. The latter's ultimate pit area now includes North Star. (7) Approximately 50% of these reserves are refractory in nature. Refractory ore is not amenable to the normal cyanidation recovery processes currently used by NGC. Such ore must be oxidized before it is subjected to the normal recovery processes. All refractory reserves are of mill-grade material containing at least 0.07 ounces per ton. NON CARLIN TREND PROVEN AND PROBABLE RESERVES Proven and probable ore reserves as of December 31, 1993 and 1992 of the projects and prospects in which NGC as a result of the Transaction has an interest, other than those on the Carlin Trend in Nevada, are listed below, together with NGC's equity interest in such projects and prospects. These reserves represent the total quantity of ore to be extracted from the deposits or stockpiles, allowing for mining efficiencies and ore dilution. Contained ounces are prior to any losses during metallurgical treatment. The Corporation's pro forma equity in these reserves, giving effect to the Transaction, is 89.22% of NGC's equity.
DECEMBER 31, 1993 DECEMBER 31, 1992 ------------------------------------------------------ ----------------------------------------------------- NGC'S NGC'S EQUITY IN EQUITY IN GRADE CONTAINED CONTAINED GRADE CONTAINED CONTAINED NGC'S DRY SHORT (OUNCES OUNCES OUNCES NGC'S DRY SHORT (OUNCES OUNCES OUNCES EQUITY TONS (000S) PER TON)(5) (000S) (000S) EQUITY TONS (000S) PER TON)(5) (000S) (000S) ----- ----------- ----------- --------- --------- ----- ----------- ----------- --------- --------- Zarafshan-Newmont (Uzbekistan)..... 50% 242,508(1) 0.036(1) 8,674 4,337 50% 165,347(1) 0.034(1) 5,578 2,789 Minahasa (Indonesia)...... 80% 8,380(2) 0.215(2) 1,799 1,439 80% -- -- -- -- Minera Yanacocha (Peru)........... 38% 84,666(3) 0.045(3) 3,780 1,436 40% 31,689(3) 0.040(3) 1,275 510 Grassy Mountain (Oregon)......... 100% 15,984(4) 0.062(4) 996 996 100% 15,984(4) 0.062(4) 996 996 ----------- --------- --------- ----------- --------- --------- Total............ 351,538 15,249 8,208 213,020 7,849 4,295 ----------- --------- --------- ----------- --------- --------- ----------- --------- --------- ----------- --------- --------- Newmont Mining's pro forma equity in contained ounces (89.22%)..................................................... 7,323 3,832 --------- --------- --------- ---------
- --------------- (1) Material available to Zarafshan-Newmont for processing, from designated stockpiles or from other specified sources. All ore is oxidized. Tonnage and gold content of material available to NGC for processing, from the designated stockpiles or from other specified sources, are guaranteed by state entities of Uzbekistan. NGC has completed confirmatory surveying, sampling, assaying and metallurgical testing on a substantial part of this material. Material will be crushed and leached. The feasibility study prepared by the joint venture used a gold price of $350 per ounce and 50% to 65% leach recovery rate, depending on material type. (2) Calculated by the Corporation using a gold price of $350 per ounce, a cutoff grade of 0.058 ounces per ton and mill recovery rates of 80% to 89% depending on material type. Substantially all the ore is refractory. (3) Calculated by the Corporation using a gold price of $350 per ounce and a cutoff grade not less than 0.010 ounces per ton. Reserves are contained in four deposits. Material is being leached. Assumed leach recovery is 60% to 83%, depending on each deposit's metallurgical properties. All ore is oxidized. (4) As published by Atlas Corporation in its Annual Report for the year ended June 30, 1991. All ore is oxidized and will be leached or milled. Feasibility study used a gold price of $350 per ounce, a 52.5% leach recovery rate, a 94% mill recovery rate and variable cutoff grades of at least 0.018 ounces per ton. (5) The stated average grade (ounces per ton) may not correspond to that determined by direct calculation due to rounding. 17 19 ITEM 3. LEGAL PROCEEDINGS LITIGATION RELATING TO THE TRANSACTION On January 13 and 19, 1994, respectively, two identical actions, both of which purported to be stockholder derivative actions, were commenced in the Court of Chancery for the State of Delaware, by alleged stockholders of NGC. The original defendants in the actions were Newmont and the members of NGC's Board of Directors (collectively, the "Original Defendants"). The separate actions were consolidated on February 17, 1994 (the "Action"). The complaints sought relief for alleged breaches of fiduciary duties by the Original Defendants in connection with (i) a series of intercompany advances from NGC to Newmont which the plaintiffs claimed were made at rates that did not approximate negotiated, arm's-length rates, thereby wasting NGC's assets, and (ii) the Transaction described in Item 1, which the plaintiffs claimed would not benefit NGC and would waste its corporate assets. The plaintiffs thereafter filed an amended complaint asserting claims for injunctive relief and for damages against the Original Defendants and NGC (collectively, the "Defendants") on behalf of a class of NGC stockholders (other than the Original Defendants) as of January 21, 1994, the record date for voting with respect to the proposed Transaction, and their successors in interest. In addition to alleging that certain of the disclosures in the Proxy Statement relating to the Transaction were inadequate, the amended complaint claimed that consummation of the proposed Transaction would be unfair to the minority stockholders of NGC and a breach of fiduciary duties of the Defendants. On March 4, 1994, following certain discovery, the parties reached an agreement in principle to settle all claims asserted in the Action (as described below, the "Settlement"). Under that agreement, the essential terms of which are set forth in a Memorandum of Understanding dated March 4, 1994, the parties agreed to certification of a class for settlement purposes only consisting of all holders of record of NGC Common Stock (other than Newmont, the individual Defendants, members of their immediate families and their legal representatives, heirs, successors or assigns) as of January 21, 1994 and their successors in interest (collectively, the "Settlement Class"). Under the terms of the Settlement, NGC has agreed to make to all members of the Settlement Class who were stockholders of record on January 21, 1994 a special payment of 6 1/2 cents per share. NGC has also agreed as part of the Settlement to pay for the costs of notice and administration of the Settlement. In addition, NGC has agreed to pay the plaintiffs' reasonable attorneys' fees and expenses in an amount to be determined by the Court, which shall not exceed $300,000. Newmont, NGC and each of the members of the Board of Directors of NGC believe that the claims asserted in the Action are without merit, but have agreed to settle the Action solely to avoid the expense and inconvenience of further protracted and time-consuming litigation. The Settlement is conditioned upon, among other things, (i) the execution of a definitive settlement agreement; (ii) final Court approval; and (iii) no other actions being filed which, in the reasonable judgement of the Defendants, would materially undermine the Defendants' rationale for settling (i.e., to eliminate the cost of further protracted litigation relating to the Transaction). If the Court, following notice to the Settlement Class and a hearing, approves the Settlement, it will be asked to enter an order and judgement providing for (a) the dismissal of the Action on the merits, and with prejudice as against NGC and the members of the Settlement Class, and (b) the general release of all claims which have been or could have been asserted by NGC or any member of the Settlement Class against the Defendants relating to or arising out of or in connection with any of the claims, transactions, facts, disclosures, matters or occurrences referred to in, or which are the subject matter of, the amended complaint in the Action. OTHER LITIGATION In December 1983, the State of Colorado filed a lawsuit in the United States District Court for the District of Colorado under the Comprehensive Environmental Response Compensation and Liability Act of 1980 (CERCLA), 42 U.S.C. 9601 et seq., seeking clean-up and damages for alleged injury to natural resources due to releases of hazardous substances into the environment. This case, State of Colorado v. ASARCO, Inc., et al. (Civil Action No. 83-C-2388), has since been consolidated with another action, United States of America v. Apache Energy & Minerals, et al. (Civil Action No. 86-C-1676), which was filed August 6, 1986, and involves allegations of environmental impairment in the vicinity of Leadville, Colorado, including the area of the operations and property of the Res-ASARCO Joint Venture which owns the Black 18 20 Cloud Mine, the Yak Tunnel, and adjacent property. The State and the United States seek remedial actions and damages from a number of defendants, including Newmont and NGC's wholly owned subsidiary, Resurrection Mining Company, which is a partner with ASARCO in the Res-ASARCO Joint Venture. See Note 13 to Item 8. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the quarter ended December 31, 1993. ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT Newmont's executive officers as of March 4, 1994 were:
NAME AGE OFFICE - ----------------------- --- ------------------------------------------ Gordon R. Parker 58 Chairman Ronald C. Cambre 55 Vice Chairman and Chief Executive Officer T. Peter Philip 61 President and Chief Operating Officer Graham M. Clark, Jr. 48 Senior Vice President and General Counsel Walter R. Lawrence 47 Senior Vice President, Operations Wayne W. Murdy 49 Senior Vice President and Chief Financial Officer David A. Baker 39 Vice President, Environmental Affairs Kenneth A. Brunk 48 Vice President, Project Development Marcel F. DeGuire 44 Vice President, Project Development and Metallurgical Research Mary E. Donnelly 42 Vice President, Government Relations John A. S. Dow 48 Vice President, Exploration Gary E. Farmar 39 Vice President and Controller Eric Hamer 51 Vice President, Indonesian Projects Leonard Harris 66 Vice President, Metallurgical Operations James F. Hill 58 Vice President, Corporate Relations Donald G. Karras 40 Vice President, Taxes Donald L. McCall 61 Vice President, Project Development Aubrey L. Paverd 55 Vice President, Exploration Jean-Michel Rendu 50 Vice President, Mine Engineering and Information Systems Timothy J. Schmitt 51 Vice President, Secretary and Assistant General Counsel Patricia A. Flanagan 35 Treasurer and Assistant Secretary
There are no family relationships by blood, marriage or adoption among any of the above executive officers of Newmont. All executive officers are elected annually by the Board of Directors or until their respective successors are chosen and qualify. There is no arrangement or understanding between any of the above executive officers and any other person pursuant to which he or she was selected as an officer. Each named executive officer, except Messrs. Brunk, DeGuire, Dow, Harris and McCall, also serves as an executive officer of NGC. Mr. Parker has been Chairman of Newmont for more than five years. He was Chief Executive Officer from October 1, 1985 to November 1, 1993. He was President of Newmont from December 6, 1984 to October 29, 1991. He is also Chairman of NGC. Mr. Cambre was elected Vice Chairman and Chief Executive Officer of Newmont on September 23, 1993 (effective November 1, 1993). Previously, he served as Vice President and Senior Technical Advisor to the office of the Chairman of Freeport-McMoRan Inc., a natural resources company, since 1988. He is also Vice Chairman and Chief Executive Officer of NGC. 19 21 Mr. Philip was elected President and Chief Operating Officer of Newmont on October 30, 1991. Previously, he was a Senior Vice President of Newmont for more than five years. He is also President and Chief Operating Officer of NGC. Mr. Clark was elected a Senior Vice President of Newmont on September 11, 1991. He was designated General Counsel on October 26, 1988 (effective May 1, 1989) and elected a Vice President on December 17, 1986. Prior to his designation as General Counsel, Mr. Clark was Vice President and Western Regional Counsel of Newmont. He is also Senior Vice President and General Counsel of NGC. Mr. Lawrence was elected Senior Vice President, Operations of Newmont on October 30, 1991. In addition, he has been Senior Vice President, Operations of NGC since October 30, 1991. Previously, he was a Vice President of NGC since December 16, 1987 serving in various senior capacities in operations and project development. Mr. Murdy was elected Senior Vice President and Chief Financial Officer of Newmont on December 16, 1992 (effective December 31, 1992). Previously, he served as Senior Vice President and Chief Financial Officer of Apache Corporation, an oil and gas exploration and production company, since May 1991. Prior to that he had been Chief Financial Officer of Apache Corporation since December 1987 and a Vice President since February 1987. He is also Senior Vice President and Chief Financial Officer of NGC. Mr. Baker was elected Vice President, Environmental Affairs of Newmont on February 26, 1992. Previously, he held various environmental positions with Newmont and NGC. He is also Vice President, Environmental Affairs of NGC. Mr. Brunk was elected Vice President, Project Development of Newmont on April 24, 1991 (effective March 11, 1991). Previously, he was a Vice President of NGC since December 16, 1987 serving in various senior capacities in operations and administration. Mr. DeGuire was elected a Vice President of Newmont on April 24, 1991 (effective March 11, 1991). He was designated Vice President, Project Development and Metallurgical Research on February 26, 1992. Previously, he had served as Vice President, Environmental Affairs and Metallurgical Research since March 11, 1991. Prior to his election as a Vice President, he served as Newmont's Director of Environmental Affairs for more than five years. Mr. Dow was elected Vice President, Exploration of Newmont on April 29, 1992. He has held various senior exploration positions with Newmont and its subsidiaries for more than five years. Ms. Donnelly was elected Vice President, Government Relations of Newmont on June 13, 1989. Previously, she served as Director of Governmental Relations since July 1, 1987 and prior to that as Assistant Director of Government Relations of Newmont. She is also Vice President, Government Relations of NGC. Mr. Farmar was elected a Vice President of Newmont on December 16, 1992 and Controller on October 30, 1991. Mr. Farmar had served as Assistant Controller since January 28, 1989. Previously, he served as Controller of Petro-Lewis Corporation, an independent oil and gas producer, for three years. He is also Vice President and Controller of NGC. Mr. Hamer was elected a Vice President of Newmont on February 24, 1993. He served as Vice President, Project Development from February 24, 1993 to December 31, 1993. Effective January 1, 1994, he was designated Vice President, Indonesian Projects. In addition, he served as Vice President and General Manager of NGC from October 30, 1991 to December 31, 1992. Previously, he served as Vice President and Resident Manager of NGC since March 11, 1991 and as Vice President, Operations from October 31, 1988 to March 10, 1991. He is also a Vice President of NGC. Mr. Harris was elected Vice President, Metallurgical Operations of Newmont on January 1, 1984. Mr. Hill was elected Vice President, Corporate Relations of Newmont on September 28, 1983. He is also Vice President, Public Relations of NGC. Mr. Karras was elected Vice President, Taxes on December 16, 1992 (effective November 9, 1992). Previously, he served as director of taxes of Kennecott Corporation, a natural resources company, for four years. He is also Vice President, Taxes of NGC. 20 22 Mr. McCall was elected a Vice President of Newmont on October 26, 1988. He was designated Vice President, Project Development on June 12, 1991. Previously, he had served as Vice President, Corporate Development since January 1, 1991. Prior to his election as a Vice President of Newmont, Mr. McCall served as Executive Vice President of Newmont Oil Company, a former subsidiary. Mr. Paverd was elected Vice President, Exploration of Newmont on April 29, 1992. He has held various senior exploration positions with Newmont and NEL for more than five years. Mr. Rendu was elected Vice President, Mine Engineering and Information Systems of Newmont on February 24, 1993. In addition, he has been Vice President, Information Systems of NGC since November 26, 1991 and Vice President, Mine Engineering of NGC since March 11, 1991 having previously served as Vice President, Technical and Scientific Systems of NGC since October 31, 1988. Prior to that he was Director of Technical and Scientific Systems of NEL. Mr. Schmitt was elected a Vice President of Newmont on December 17, 1986 and was elected Secretary on May 25, 1988. He was designated Assistant General Counsel on October 30, 1991. He served as Controller from March 31, 1983 through October 29, 1991. He is also Vice President, Secretary and Assistant General Counsel of NGC. Ms. Flanagan was elected Treasurer of Newmont on December 16, 1992. Previously, she was an Assistant Treasurer from November 1, 1988 through December 15, 1992. She was appointed Assistant Secretary on June 24, 1992. She is also Treasurer and Assistant Secretary of NGC. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Newmont's Common Stock is traded on the New York Stock Exchange. Newmont's stock prices in 1993 and 1992, restated for the Stock Split, payable in the form of a stock dividend, declared on March 21, 1994, were:
1993 1992 ------------- ------------- HIGH LOW HIGH LOW --- --- --- --- First quarter............................................................. 36 29 5/8 37 7/8 29 7/8 Second quarter............................................................ 43 1/4 32 1/8 39 1/4 29 Third quarter............................................................. 47 1/8 35 7/8 43 1/8 34 1/4 Fourth quarter............................................................ 46 3/8 37 5/8 39 1/2 29 1/4
On March 4 1994, the approximate number of holders of record of Newmont's Common Stock was 6,300. A dividend of $0.12 per share of Common Stock outstanding was declared in each quarter of 1993 and 1992, or a total of $0.48 per share in each such year (in each case restated for the Stock Split). The determination of the amount of future dividends, however, will be made by the Corporation's Board of Directors from time to time and will depend on the Corporation's future earnings, capital requirements, financial condition and other relevant factors. For a description of certain restrictions on the payment of dividends, see Note 6 to Item 8. 21 23 ITEM 6. SELECTED FINANCIAL DATA
FOR THE YEARS ENDED DECEMBER 31, -------------------------------------------------------------- 1993 1992 1991 1990 1989 ---------- ---------- -------- -------- ---------- (IN THOUSANDS, EXCEPT PER SHARE) Sales............................... $ 634,294 $ 613,196 $622,771 $683,493 $ 582,141 ---------- ---------- -------- -------- ---------- ---------- ---------- -------- -------- ---------- Income from continuing operations before cumulative effects of changes in accounting principles.. $ 94,669 $ 90,621 $ 94,278 $168,497 $ 78,360 Discontinued operations -- after tax............................... -- -- -- 174,067 47,491 Cumulative effects of changes in accounting principles after tax... 38,470 (11,572) -- -- -- ---------- ---------- -------- -------- ---------- Net income.......................... $ 133,139 $ 79,049 $ 94,278 $342,564 $ 125,851 ---------- ---------- -------- -------- ---------- ---------- ---------- -------- -------- ---------- Earnings per share*: Income from continuing operations before cumulative effects of changes in accounting principles..................... $ 0.92 $ 1.04 $ 1.11 $ 1.99 $ 0.93 Income from discontinued operations -- after tax........ -- -- -- 2.06 0.57 Cumulative effects of changes in accounting principles.......... 0.45 0.14 -- -- -- ---------- ---------- -------- -------- ---------- Net income.......................... $ 1.37 $ 0.90 $ 1.11 $ 4.05 $ 1.50 ---------- ---------- -------- -------- ---------- ---------- ---------- -------- -------- ---------- Dividends declared per common share*............................ $ 0.48 $ 0.48 $ 0.48 $ 0.48 $ 0.48 ---------- ---------- -------- -------- ---------- ---------- ---------- -------- -------- ----------
- --------------- * All amounts have been restated for a 1.2481 shares to 1 share stock split declared March 21, 1994. See Note 14 in Item 8. AT DECEMBER 31: Total assets....................... $1,186,410 $1,236,304 $818,057 $950,933 $1,294,399 Long-term debt, including current portion.......................... $ 192,000 $ 265,689 $224,395 $414,228 $1,076,425 Stockholders' equity (deficit)..... $ 629,832 $ 528,565(1) $201,448 $109,572 $ (199,556)
- --------------- (1) Includes the effect of the issuance of 2.875 million shares of $5.50 convertible preferred stock. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS All per share amounts herein have been restated for the 1.2481 shares to 1 share stock split declared March 21, 1994. The stock split was declared as part of a transaction in which the Corporation transferred all of its assets and liabilities to Newmont Gold Company ("NGC"), owned approximately 90% by the Corporation, effective January 1, 1994. The details of this transaction are included in Note 14 to Item 8. This transaction will have a minimal impact on the Corporation's results of operations, liquidity and capital resources. Before the cumulative effect of changes in accounting principles, Newmont Mining Corporation and subsidiaries (the "Corporation") earned $94.7 million, or $0.92 per share; $90.6 million, or $1.04 per share; and $94.3 million, or $1.11 per share, in 1993, 1992 and 1991, respectively. In late 1992, the Corporation issued convertible preferred stock. The related annual dividend requirement of $15.9 million, or $0.18 per share, reduced 1993's earnings per share. The impact of the preferred stock dividend in 1992 was a reduction of only $1.7 million, or $0.02 per share, due to the preferred stock being outstanding for only a short period. In 1993, the Corporation adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," which resulted in a benefit for the cumulative effect of $38.4 million, or $0.45 per share. Further information about this change in accounting for income taxes can be found in Note 5 to Item 8. In 22 24 1992, the Corporation adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," which resulted in a charge for the cumulative effect of $11.6 million, or $0.14 per share, which was net of an income tax benefit of $6.0 million, or $0.07 per share. Further information about this accounting change is included in Note 8 to Item 8. The Corporation's sales revenues are derived almost entirely from NGC's gold production which is concentrated on the Carlin Trend in Nevada. NGC's gold production was 1,666,400 ounces, 1,587,900 ounces and 1,576,900 ounces in 1993, 1992 and 1991, respectively. The Corporation hedged a portion of this production through a gold loan during all three years and used additional hedging instruments in 1992 and 1991. As a result, the Corporation realized above market prices on its production of $376 per ounce in 1993, $379 per ounce in 1992 and $391 per ounce in 1991. This compares to average market per ounce prices of $361, $344 and $363 for the same respective years. The Corporation made the final payment on its gold loan on December 31, 1993 and recognized the associated deferred revenue of $23.5 million during 1993. Currently, no future production is hedged. The effect of the changes in the average annual gold price realized and gold production levels on the change in sales revenues between years is reflected in the following table (in thousands):
1993 VS. 1992 1992 VS. 1991 ------------- ------------- Increase (decrease) in sales revenue due to: Gold price................................................. $ (5,607) $ (19,528) Production................................................. 28,519 8,604 ------------- ------------- Total.............................................. $ 22,912 $ (10,924) ------------- ------------- ------------- -------------
Although NGC's production has slightly increased over the past two years, the Corporation expects there will be a slight decline in NGC's Nevada production over the next several years before the deeper and higher grade portions of NGC's Post deposit are mined. NGC's Nevada production in 1994 has been targeted at approximately 1.6 million ounces, with approximately 200,000 ounces expected to come from NGC's new $300 million refractory ore treatment plant ("roaster") which is expected to begin production in the third quarter of 1994. The roaster will allow for the effective treatment of carbonaceous and sulfidic refractory ores which are becoming more dominant in NGC's Nevada mines. The Corporation expects that Nevada production will be augmented in 1995 from production from two non-U.S. projects. One of these projects, the Zarafshan-Newmont Joint Venture, is a 50-50 joint venture between the Corporation and two governmental entities of Uzbekistan. The joint venture will leach low grade oxide ore to produce gold from existing stockpiles from the Muruntau mine in Uzbekistan. This project, which is expected to cost approximately $150 million, is anticipated to commence production in the first quarter of 1995 at an annual rate of approximately 450,000 ounces, or 225,000 ounces attributable to the Corporation's interest. The second project is located in Indonesia and is owned by an Indonesian company in which the Corporation has an 80% interest. The preliminary estimate for the capital costs of this project is $100 million. Production is expected to begin late in 1995 at initial total annual rates of approximately 100,000 ounces. In addition to these two non-U.S. projects, the Corporation also has a 38% interest in Minera Yanacocha S.A. ("Minera Yanacocha"), a Peruvian company which the Corporation manages and which is accounted for as an equity investment. Minera Yanacocha commenced gold production from a leaching operation in August of 1993 and produced 81,500 ounces, or approximately 31,000 ounces attributable to the Corporation's interest in 1993. Production is expected to increase to 220,000 ounces, or approximately 84,000 ounces attributable to the Corporation's interest, in 1994 and then further increase to 350,000 to 400,000 ounces (130,000 to 150,000 ounces attributable to the Corporation's interest) in 1995 as an additional deposit is mined. Minera Yanacocha's operating cost per ounce of gold produced in 1993 was approximately $150 and it expects to maintain this per ounce rate as production increases. The Corporation's interest in Minera Yanacocha resulted in equity income of $5.2 million in 1993, and such amount is expected to significantly increase in 1994 and 1995. The Corporation's consolidated production and its equity in Minera Yanacocha's production is targeted to exceed 2,000,000 ounces annually by 1997. 23 25 As with sales revenues, costs applicable to sales and depreciation, depletion and amortization ("DD&A") are almost entirely attributable to NGC's Nevada operations. Costs applicable to sales consist primarily of production costs and royalties. Production costs consist principally of charges for mining ore and waste associated with current period production and processing ore through milling and leaching facilities. Primarily because of tons mined increasing each year, total gold production costs increased from $236.7 million in 1991 to $259.5 million in 1992 to $276.0 million in 1993. Tons mined, excluding tons attributable to capitalized mining costs discussed below, increased from 124 million in 1991 to 139 million in 1992 to 188 million in 1993. In addition to the production costs expensed, a substantial portion of mining costs associated with NGC's Post deposit is being capitalized. This deposit is being mined under a joint mining agreement signed in December 1992 by NGC and Barrick Goldstrike Mines, Inc. ("Barrick"). Under the agreement, Barrick, which has a separate and distinct interest in the same ore body, mines the deposit and charges NGC on a basis that will result in both companies ultimately bearing the same cost per contained ounce of gold mined. Since a significant portion of NGC's contained ounces in this deep deposit are not expected to be mined for at least three years, the mining costs are being capitalized and will be matched against the revenue from the ounces when they are produced. Such costs were $23.6 million and $5.2 million in 1993 and 1992, respectively. These costs are expected to increase again in 1994 by approximately 50% over the 1993 level due to expected increased mining rates. Royalty costs were $51.4 million in 1991, $46.6 million in 1992 and $47.6 million in 1993. More than half of the decrease between 1991 and 1992 was due to the lower average gold price received in 1992 relative to 1991. The balance of the decrease was due to treating less royalty-burdened ore in 1992. Total royalty ounces produced declined again in 1993 but the increase in the average gold price more than offset the decline. In general, royalty ounces produced are expected to continue to decline in the future as NGC expects to treat less royalty burdened ore. The federal government is studying proposals to impose royalties on revenues from production of hard-rock minerals, including gold, from federal land. Because 94% of NGC's proven and probable gold reserves are on private land, these proposals would not have a substantial impact on current operations. However, these proposals, if enacted into law, could adversely impact the Corporation's ability to find and exploit additional resources in the United States as most exploration prospects are on federal land. NGC's cost applicable to sales per ounce of gold production have increased from $190 in 1991, to $198 in 1992, to $200 in 1993. These per ounce costs have increased as a result of a decrease in the overall ore grade of material processed combined with NGC's higher mining rates. The overall grade of material processed by NGC has decreased from 0.047 ounces per ton in 1991 to 0.038 ounces per ton in 1992 to 0.033 ounces per ton in 1993. With the roaster beginning operations in 1994, total production costs for the Nevada operations are expected to again increase, resulting in costs applicable to sales per ounce of production increasing annually approximately 5% to 10% in 1994 and 1995. The Corporation expects that the increase in per ounce costs for its Nevada operations will partially be offset when the Uzbekistan and Indonesian projects begin production in 1995. The Corporation currently estimates that the initial per ounce operating costs for the Uzbekistan project will be approximately $150 and for the Indonesian project approximately $200. Per ounce production costs for the Nevada operations are expected to decline once greater quantities of higher grade refractory ore from the Post deposit begin to be treated, which current mine plans project to occur in 1997. DD&A, which is almost entirely attributable to NGC, has increased over the last three years. The increase between 1991 and 1992 was primarily due to an increase in NGC's estimate of future mine dewatering costs. The increase in 1993 from 1992 was primarily due to a higher level of property, plant and equipment in service. Although the Corporation will incur significant capital expenditures in 1994, DD&A is expected to be approximately the same as in 1993. This is primarily due to the retirement of NGC's Mill No. 2 in its South Area of operations (which will be replaced by the roaster), and Mill No. 3 in its Rain Area of operations, due to the depletion of that deposit. No material gain or loss is anticipated from the retirement of these facilities. Exploration expense has increased over the three year period as the Corporation looks worldwide for gold reserves. Exploration efforts are concentrated along the Carlin Trend in North America, and in Indonesia and South America. The Corporation expects to continue to fund an aggressive exploration effort. 24 26 General and administrative expense ("G&A") has remained fairly constant over the last three years. However, because of the costs associated with the advancement of the foreign projects and the Corporation's expanding activities, G&A is expected to increase 10% to 15% in 1994. Net interest expense decreased in 1993 approximately $2.2 million primarily due to a $6.1 million increase in capitalized interest in 1993 associated with capital projects. No interest was capitalized in 1991. Gross interest expense has been increasing over the past three years as the low-interest gold loan has been paid off and replaced with higher cost debt. Interest expense is expected to continue to increase as the Corporation expects to finance a significant portion of its capital projects with debt as discussed in "Liquidity and Capital Resources." During 1993, the Corporation sold its remaining interest in Newcrest Mining Limited for $67 million and recognized a gain of $29.6 million. In 1991, the Corporation recognized a $36.1 million gain on the exchange of its investment in common stock of E. I. duPont de Nemours and Company for its 7% exchangeable debentures, pursuant to the terms of the debentures. Dividends, interest and other income decreased $6.2 million in 1992 from 1991 as the 1991 period benefited from the recognition of income related to certain gold option transactions that were not considered hedges on gold production. Interest income is expected to decrease in the future due to lower available cash balances resulting from the high level of capital expenditures discussed in "Liquidity and Capital Resources." Other expense increased $10.5 million in 1993 over 1992. Approximately $6 million of this increase was for additional provisions for estimated environmental related costs primarily associated with former mining activities as discussed in Note 13 to Item 8. Although the Corporation believes that it has adequately accrued for such costs at December 31, 1993, as additional facts become known, additional provisions may be required. Another $3.5 million of the 1993 increase in other expense represents the estimated costs of the transaction with NGC discussed in Note 14 to Item 8. In 1991, other expense included a $36.0 million charge for environmental related costs, a $6.0 million provision for the estimated loss on former office space leased by the Corporation and a $5.1 million provision for certain personnel layoffs and organizational changes which took place in 1991. The Corporation's effective tax rates are significantly lower than the corporate statutory rates primarily because of the impact of percentage depletion. In addition, the effective tax rate in 1992 was unusually low primarily as a result of greater amounts of deferred tax benefits recognized. General inflation over the past three years has not had a material effect on the Corporation's cost of doing business and is not expected to have a material effect in the foreseeable future. Changes in the price received for gold will impact the Corporation's revenue stream, as previously discussed. LIQUIDITY AND CAPITAL RESOURCES During 1993, the Corporation had extensive cash outlays, including $235.3 million for capital expenditures, of which $101.9 million was for the roaster, $88.7 million to repay gold loan debt and $58.0 million to pay dividends, $17.0 million of which pertained to the convertible preferred stock. These outlays were largely funded through a reduction of cash balances of $221.3 million. In addition, the sale of the Newcrest Mining Limited shares, which had been classified on the balance sheet as an asset held for sale, provided approximately $67 million of cash. Another $26.1 million was provided by employees exercising employee stock options and $15 million was borrowed during the year through the issuance of debt under the Corporation's medium-term note program. Cash provided by operating activities in 1993 was $32.8 million, or approximately $100 million less than in the prior year. The primary reason for this decrease was an increase in inventory levels in 1993 of $67.8 million compared with a $14.1 million decrease in 1992. Increases in ore inventories accounted for $51.3 million. Ore inventories at NGC increased $27.3 million due to the higher mining rates mentioned in "Results of Operations." Of this increase, $7.7 million is considered a long-term other asset as this ore is not expected to be processed in the next year. Ore inventories related to the Nevada operations are expected to increase again in 1994, but by a lesser amount than they did in 1993. The remaining increase in total ore inventories relates to the Uzbekistan project and is classified as a long-term asset. In 1993, $23.8 million of ore stockpiles to be processed by the joint venture was added to the Corporation's ore inventory. The Corporation 25 27 acquired the stockpiles to provide the Uzbekistan entities with the equity capital they required for the project. These ore stockpiles will be the first to be purchased and processed by the joint venture when it commences operations in 1995. The remaining increase in inventories in 1993 is attributable to precious metals, the level of which can fluctuate significantly from year-to-year depending on gold dore shipping dates. Approximately $400 million of capital expenditures are expected to be required in 1994. Of this amount, approximately $300 million is expected to be required for the Nevada operations, with almost one-half of this amount required to complete the roaster. Another $100 million is expected to be spent on the Uzbekistan and Indonesian projects. The Corporation's available cash and operating cash flow in 1994 will not be sufficient to cover these expenditures. The Corporation has an unused $280 million revolving credit facility and expects to have $150 million available under a medium-term note program. Project financing of $52.5 million has been arranged for the Corporation's share of capital expenditures required for the Uzbekistan project. The Corporation believes these facilities provide adequate liquidity to finance the Corporation's capital investment programs. However, the Corporation continuously monitors capital markets and may utilize alternative sources of funds available to it. The Corporation expects to fund maturities of its debt through operating cash flow and/or by refinancing the debt as it becomes due. Capital expenditures are expected to decrease after 1994. The Corporation expects it would be able to finance any amounts needed for future capital expenditures that are in excess of operating cash flow with debt and may specifically arrange project financing on major projects. As discussed in "Results of Operations," the Corporation has significant environmental liabilities associated with former mining activities, as discussed in Note 13 to Item 8. Approximately $63 million had been accrued at December 31, 1993 for these liabilities. Because of the uncertain nature of these liabilities, the Corporation estimates that it is reasonably possible that the ultimate liability may be as much as 60% greater or 20% lower than the amount accrued at December 31, 1993. Because actual cash payments on these liabilities will occur over a number of years, the settlement of such liabilities is not expected to have a material impact on the Corporation's liquidity. In addition, the Corporation expects to recover a significant portion of these costs from insurance carriers, but when such recovery will occur is not certain. Absent concurrent insurance recoveries, on-going cash payments will be funded out of operating cash flows or borrowings. Of the Corporation's $235.3 million in capital expenditures in 1993, it is estimated that approximately $66 million was required to comply with environmental regulations. The Corporation estimates that in 1994 approximately $90 million to $95 million will be spent for capital expenditures to comply with environmental regulations. A significant portion of these 1993 and 1994 expenditures are related to the roaster. Upon completion of this facility, environmental capital expenditures are not expected to be more than approximately $20 million, annually. Ongoing costs to comply with environmental regulations are not significant. The Corporation provides for future reclamation and mine closure costs on a units-of-production basis. The annual accrual of such costs has not been significant. The Corporation reviews the adequacy of its reclamation and closure reserves in light of current laws and regulations and makes provisions as necessary. In addition, periodic internal environmental audits are conducted to evaluate environmental compliance. Cash flow from the Corporation's operations and salvage values are expected to provide funding for reclamation and closure costs. The Corporation believes that its current operations are in compliance with applicable laws and regulations designed to protect the public health and environment. 26 28 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA MANAGEMENT'S REPORT NEWMONT MINING CORPORATION AND SUBSIDIARIES Management is responsible for the preparation of the accompanying consolidated financial statements and for other financial and operating information presented in this annual report. It believes that its accounting systems and internal accounting controls, together with other controls, provide assurance that all accounts and records are maintained by qualified personnel in requisite detail, and accurately and fairly reflect transactions of Newmont Mining Corporation and its subsidiaries (the "Corporation") in accordance with established policies and procedures. The Board of Directors has an Audit Committee whose members are neither officers nor employees of the Corporation. During 1993, the Audit Committee held three meetings. The Audit Committee recommends independent public accountants to act as auditors for the Corporation for consideration by the Board of Directors; reviews the Corporation's financial statements; confers with the independent public accountants with respect to the scope and results of their audit of the Corporation's financial statements and their reports thereon; reviews the Corporation's accounting policies, tax matters and internal controls; and oversees compliance by the Corporation with requirements of the Financial Accounting Standards Board and federal regulatory agencies. The Audit Committee also reviews non-audit services furnished to the Corporation by the independent public accountants. Access to the Audit Committee is given to the Corporation's financial and accounting officers. 27 29 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Newmont Mining Corporation: We have audited the accompanying consolidated balance sheets of Newmont Mining Corporation (a Delaware corporation) and subsidiaries as of December 31, 1993 and 1992, and the related statements of consolidated income, changes in stockholders' equity and cash flows for each of the three years in the period ended December 31, 1993. These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Newmont Mining Corporation and subsidiaries as of December 31, 1993 and 1992, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1993 in conformity with generally accepted accounting principles. As discussed in Note 5 to the consolidated financial statements, effective January 1, 1993, the Corporation changed its method of accounting for income taxes. In addition, as discussed in Note 8 to the consolidated financial statements, effective January 1, 1992, the Corporation changed its method of accounting for postretirement benefits other than pensions. /s/ ARTHUR ANDERSEN & CO. Arthur Andersen & Co. Denver, Colorado January 25, 1994 28 30 NEWMONT MINING CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED INCOME (IN THOUSANDS, EXCEPT PER SHARE)
YEARS ENDED DECEMBER 31, ----------------------------------- 1993 1992 1991 --------- --------- --------- Sales and other income Sales................................................... $ 634,294 $ 613,196 $ 622,771 Dividends, interest and other........................... 19,976 18,461 24,618 Gain on disposition of securities....................... 29,607 -- 36,107 --------- --------- --------- 683,877 631,657 683,496 --------- --------- --------- Costs and expenses Costs applicable to sales............................... (339,157) (323,257) (301,992) Depreciation, depletion and amortization................ (110,000) (98,760) (94,048) Exploration............................................. (52,694) (51,993) (47,229) General and administrative.............................. (35,849) (35,393) (36,562) Interest, net of amounts capitalized.................... (12,394) (14,555) (13,021) Other................................................... (14,437) (3,899) (55,971) --------- --------- --------- (564,531) (527,857) (548,823) --------- --------- --------- Equity in income (loss) of affiliated companies........... 5,001 (2,821) -- --------- --------- --------- Pretax income before cumulative effect of changes in accounting principles................................... 124,347 100,979 134,673 Income tax provision...................................... (18,565) (2,778) (27,940) Minority interest in income of subsidiaries............... (11,113) (7,580) (12,455) --------- --------- --------- Income before cumulative effect of changes in accounting principles.............................................. 94,669 90,621 94,278 Cumulative effect of changes in accounting principles, net of income tax benefit of $5,962 in 1992................. 38,470 (11,572) -- --------- --------- --------- Net income................................................ 133,139 79,049 94,278 Preferred stock dividends................................. (15,910) (1,747) -- --------- --------- --------- Net income applicable to common shares.................... $ 117,229 $ 77,302 $ 94,278 --------- --------- --------- --------- --------- --------- Income (loss) per common share: Before cumulative effect of changes in accounting principles........................................... $ 0.92 $ 1.04 $ 1.11 Cumulative effect of changes in accounting principles... 0.45 (0.14) -- --------- --------- --------- Net income per common share............................. $ 1.37 $ 0.90 $ 1.11 --------- --------- --------- --------- --------- ---------
The accompanying notes are an integral part of these statements. 29 31 NEWMONT MINING CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE) ASSETS
AT DECEMBER 31, ----------------------- 1993 1992 ---------- ---------- Cash and cash equivalents............................................. $ 69,750 $ 291,024 Short-term investments................................................ 18,709 18,015 Inventories........................................................... 122,246 85,932 Other................................................................. 18,259 13,682 ---------- ---------- Current assets...................................................... 228,964 408,653 Asset held for sale................................................... -- 37,371 Property, plant and mine development, net............................. 794,530 662,172 Other................................................................. 162,916 128,108 ---------- ---------- Total assets................................................ $1,186,410 $1,236,304 ---------- ---------- ---------- ---------- LIABILITIES Short-term debt....................................................... $ 15,739 $ 10,941 Current portion of long-term debt..................................... -- 88,689 Accounts payable...................................................... 17,937 27,297 Accrued income taxes.................................................. 2,143 27,473 Other accrued liabilities............................................. 74,215 65,290 Deferred revenue...................................................... -- 23,508 ---------- ---------- Current liabilities................................................. 110,034 243,198 Long-term debt........................................................ 192,000 177,000 Reclamation liabilities............................................... 71,093 75,658 Other long-term liabilities........................................... 92,171 87,676 Deferred income taxes................................................. -- 44,052 ---------- ---------- Total liabilities........................................... 465,298 627,584 ---------- ---------- Minority interest in subsidiaries..................................... 91,280 80,155 ---------- ---------- Commitments and Contingencies STOCKHOLDERS' EQUITY Preferred stock -- $5.00 par value; 5,000 shares authorized; 2,875 shares issued of $5.50 convertible (aggregate liquidation preference $287,500)................................................ 14,375 14,375 Common stock -- $1.60 par value; 120,000 shares authorized; 86,698 and 69,114 issued, less 902 and 965 treasury shares, respectively....... 137,274 109,038 Capital in excess of par value........................................ 293,031 295,163 Retained earnings..................................................... 185,152 109,989 ---------- ---------- Total stockholders' equity.................................. 629,832 528,565 ---------- ---------- Total liabilities and stockholders' equity.................. $1,186,410 $1,236,304 ---------- ---------- ---------- ----------
The accompanying notes are an integral part of these statements. 30 32 NEWMONT MINING CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CHANGES IN STOCKHOLDERS' EQUITY (IN THOUSANDS, EXCEPT PER SHARE)
PREFERRED STOCK COMMON STOCK CAPITAL IN RETAINED ---------------- ------------------- EXCESS OF EARNINGS SHARES AMOUNT SHARES AMOUNT PAR VALUE (DEFICIT) ------ ------- ------- --------- ---------- --------- Balance at December 31, 1990.......... -- $ -- 67,688 $ 108,300 $ 13,685 $ (12,413) Stock options exercised............. -- -- 99 158 3,027 -- Common stock issued from treasury... -- -- 3 5 102 -- Reversal of deferred taxes related to prior year subsidiary stock distribution..................... -- -- -- -- -- 34,927 Net income.......................... -- -- -- -- -- 94,278 Common stock dividends -- $0.48 per share........................ -- -- -- -- -- (40,621) ------ ------- ------- --------- ---------- --------- Balance at December 31, 1991.......... -- -- 67,790 108,463 16,814 76,171 Preferred stock issued.............. 2,875 14,375 -- -- 265,436 -- Stock options exercised............. -- -- 358 573 12,905 -- Common stock issued from treasury... -- -- 1 2 8 -- Net income.......................... -- -- -- -- -- 79,049 Common stock dividends -- $0.48 per share........................ -- -- -- -- -- (40,816) Preferred stock dividends -- $5.50 per share, pro rata.............. -- -- -- -- -- (1,747) Minimum pension liability adjustment....................... -- -- -- -- -- (2,668) ------ ------- ------- --------- ---------- --------- Balance at December 31, 1992.......... 2,875 14,375 68,149 109,038 295,163 109,989 Stock options exercised............. -- -- 350 560 14,913 -- Common stock issued from treasury, primarily for stock options exercised........................ -- -- 242 388 10,243 -- Net income.......................... -- -- -- -- -- 133,139 Common stock dividends -- $0.48 per share........................ -- -- -- -- -- (41,019) Preferred stock dividends -- $5.50 per share........................ -- -- -- -- -- (15,910) Minimum pension liability adjustment....................... -- -- -- -- -- (1,047) 1.2481 shares for 1 share stock split declared March 21, 1994.... -- -- 17,055 27,288 (27,288) -- ------ ------- ------- --------- ---------- --------- Balance at December 31, 1993.......... 2,875 $14,375 85,796 $ 137,274 $ 293,031 $ 185,152 ------ ------- ------- --------- ---------- --------- ------ ------- ------- --------- ---------- ---------
The accompanying notes are an integral part of these statements. 31 33 NEWMONT MINING CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS (IN THOUSANDS)
YEARS ENDED DECEMBER 31, ----------------------------------- 1993 1992 1991 --------- --------- --------- Operating activities Net income.............................................. $ 133,139 $ 79,049 $ 94,278 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization............. 110,000 98,760 94,048 Minority interest, net of dividends.................. 11,229 7,500 11,936 Deferred taxes....................................... (65,774) (30,605) (16,655) Gain on securities................................... (29,607) -- (36,107) Debt repayment at less than monetized amount......... (23,508) (26,039) (20,944) --------- --------- --------- 135,479 128,665 126,556 (Increase) decrease in operating assets: Inventories........................................ (67,820) 14,105 (34,627) Other assets....................................... (840) (22,090) (5,114) Increase (decrease) in operating liabilities: Accounts payable and accrued expenses.............. (7,592) (16,933) 1,163 Accrued income taxes............................... (6,260) 13,407 (30,060) Other liabilities.................................. (13,311) 15,750 34,612 Other operating...................................... (6,853) 3,510 5,796 --------- --------- --------- Net cash provided by operating activities................. 32,803 136,414 98,326 --------- --------- --------- Investing activities Additions to property, plant and mine development....... (235,314) (212,701) (95,502) Proceeds from sales of securities and maturities of short-term investments............................... 88,189 18,264 16,897 Purchase of short-term investments...................... (16,845) (19,664) (13,861) Other................................................... 10,653 6,492 8,782 --------- --------- --------- Net cash used in investing activities..................... (153,317) (207,609) (83,684) --------- --------- --------- Financing activities Short-term borrowings................................... 4,798 28 2,618 Proceeds from long-term borrowings...................... 15,000 177,000 -- Repayments of long-term borrowings...................... (88,689) (86,157) (91,314) Proceeds from issuance of common stock.................. 26,104 13,488 3,185 Proceeds from issuance of preferred stock............... -- 279,811 -- Dividends paid on common stock.......................... (41,019) (40,816) (40,621) Dividends paid on preferred stock....................... (16,954) -- -- --------- --------- --------- Net cash provided by (used in) financing activities....... (100,760) 343,354 (126,132) --------- --------- --------- Net increase (decrease) in cash and cash equivalents...... (221,274) 272,159 (111,490) Cash and cash equivalents at beginning of year............ 291,024 18,865 130,355 --------- --------- --------- Cash and cash equivalents at end of year.................. $ 69,750 $ 291,024 $ 18,865 --------- --------- --------- --------- --------- ---------
See Note 12 for supplemental cash flow information. The accompanying notes are an integral part of these statements. 32 34 NEWMONT MINING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (ALL COMMON SHARE AND PER SHARE AMOUNTS HAVE BEEN RESTATED FOR THE 1.2481 SHARES TO 1 SHARE STOCK SPLIT DECLARED MARCH 21, 1994. SEE NOTE 14) (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Newmont Mining Corporation and its more than 50% owned subsidiaries (collectively, the "Corporation"). All significant intercompany balances and transactions have been eliminated. The Corporation's principal subsidiary is Newmont Gold Company ("NGC"), which is approximately 90% owned. RECLASSIFICATIONS Certain amounts in prior years have been reclassified to conform to the 1993 presentation. CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of all cash balances and highly liquid investments with an original maturity of three months or less. Excess cash balances are primarily invested in U.S. Treasury bills with lesser amounts invested in high quality commercial paper and time deposits with high credit-worthy financial institutions. INVESTMENTS Short-term investments are carried at cost, which approximates market, and include Eurodollar government and corporate obligations rated AA or higher. At December 31, 1993 and December 31, 1992, approximately $10 million of such investments secured letters-of-credit. Investments in companies in which the Corporation's ownership is 20% to 50% are accounted for by the equity method of accounting. Investments in companies owned less than 20% are recorded at the lower of cost or net realizable value. INVENTORIES Ore and in-process inventories and materials and supplies are stated at the lower of average cost or net realizable value. Precious metals are stated at market value. Non-current inventories are stated at the lower of average cost or net realizable value and represent ore in stockpiles from which no material is expected to be processed for more than one year after the balance sheet date. PROPERTY, PLANT AND MINE DEVELOPMENT Expenditures for new facilities or expenditures which extend the useful lives of existing facilities are capitalized and depreciated using the straight-line method at rates sufficient to depreciate such costs over the estimated productive lives of such facilities, which range from two to fifteen years. Mineral exploration costs are expensed as incurred. When it has been determined that a mineral property has proven or probable ore reserves, the costs of subsequent reserve definition and the costs incurred to develop such property, including costs to remove overburden to initially expose the ore body, are capitalized. Such costs, and estimated future development costs are amortized using a units-of-production method over the estimated life of the ore body. On-going development expenditures to maintain production are generally charged to operations as incurred. Significant payments related to the acquisition of exploration interests are capitalized. If a mineable ore body is discovered, such costs are amortized using a units-of-production method. If no mineable ore body is 33 35 NEWMONT MINING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) discovered, such costs are expensed in the period in which it is determined the property has no future economic value. Interest expense allocable to the cost of developing mining properties and to constructing new facilities is capitalized until operations commence. Gains or losses from normal sales or retirements of assets are included in other income or expense. MINING COSTS In general, mining costs are charged to operations as incurred. Due to the diverse waste-to-ore ratios encountered in mining NGC's Post deposit, mining costs for the Post deposit, to the extent they do not relate to current production, are capitalized and then charged to operations when the applicable gold is produced. RECLAMATION AND MINE CLOSURE COSTS Estimated future reclamation and mine closure costs are based principally on legal and regulatory requirements and are accrued and charged over the expected operating lives of the Corporation's mines using a units-of-production method. DEFERRED INCOME TAXES Prior to 1993, the Corporation recorded deferred income taxes under Accounting Principles Board Opinion No. 11, "Accounting for Income Taxes" ("APB 11"). Under the deferred method of APB 11, the Corporation recognized certain revenues and expenses for financial reporting purposes at different times than it recognized such amounts for income tax purposes, generating a deferred income tax charge or benefit for the year. Effective January 1, 1993, the Corporation adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). Under the liability method of SFAS 109, the Corporation recognizes certain temporary differences between the financial reporting basis of the Corporation's liabilities and assets and the related income tax basis for such liabilities and assets. This generates a net deferred income tax liability or net deferred income tax asset for the past year, as measured by the statutory tax rates in effect as enacted. The Corporation then derives its deferred income tax charge or benefit by recording the change in the net deferred income tax liability or net deferred income tax asset balance for the year. HEDGING ACTIVITIES The Corporation may enter into gold loans, options contracts and forward sales contracts to hedge the effect of price changes on the gold it produces. Gains and losses realized on such instruments, as well as any cost or revenue associated therewith, are recognized in sales when the related production is delivered. EARNINGS PER COMMON SHARE Earnings per common and common equivalent share are based upon the sum of the weighted average number of common shares outstanding during each period and the assumed exercise of stock options having exercise prices less than the average market prices of the common stock during the period using the treasury stock method. The convertible preferred shares are not common stock equivalents and were anti-dilutive for 1993 and 1992. The weighted average number of shares used in the earnings per share calculations, as adjusted for the 1.2481 shares to 1 share stock split declared March 21, 1994, were 85.5 million, 85.0 million and 84.6 million in 1993, 1992 and 1991, respectively. 34 36 NEWMONT MINING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (2) INVENTORIES
AT DECEMBER 31, -------------------- 1993 1992 -------- ------- (IN THOUSANDS) Current: Ore and in-process inventories................................ $ 55,874 $36,129 Precious metals............................................... 38,090 23,466 Materials and supplies........................................ 25,907 26,337 Other......................................................... 2,375 -- -------- ------- $122,246 $85,932 -------- ------- -------- ------- Non-current: Ore in stockpiles (included in other assets).................. $ 40,206 $ 8,700 -------- ------- -------- -------
(3) PROPERTY, PLANT AND MINE DEVELOPMENT
AT DECEMBER 31, ----------------------- 1993 1992 --------- --------- (IN THOUSANDS) Land and mining claims...................................... $ 68,755 $ 71,030 Buildings and equipment..................................... 784,071 748,850 Mine development............................................ 202,814 175,170 Construction in progress.................................... 232,693 87,456 --------- --------- 1,288,333 1,082,506 Accumulated depreciation, depletion and amortization........ (522,556) (425,484) Capitalized mining costs.................................... 28,753 5,150 --------- --------- $ 794,530 $ 662,172 --------- --------- --------- ---------
(4) OTHER ACCRUED LIABILITIES
AT DECEMBER 31, ----------------------- 1993 1992 --------- --------- (IN THOUSANDS) Plant and equipment......................................... $ 20,340 $ 10,386 Payroll and related benefits................................ 14,960 14,061 Reclamation liabilities..................................... 8,399 6,600 Other....................................................... 30,516 34,243 --------- --------- $ 74,215 $ 65,290 --------- --------- --------- ---------
(5) INCOME TAXES SFAS 109 requires that, effective January 1, 1993, the Corporation account for income taxes under the liability method, rather than the deferred method required previously under APB 11. The cumulative effect of this change in accounting for income taxes is an increase to earnings of $38.5 million, or $0.45 per share, attributable to fiscal years prior to 1993. Under SFAS 109, the Corporation must establish deferred income tax liabilities and deferred income tax assets when temporary differences arise between the financial reporting basis and the income tax basis of the Corporation's liabilities and assets. The actual measurement of the deferred income tax liabilities and assets is based upon the tax rates and tax law provisions as enacted. 35 37 NEWMONT MINING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Deferred income tax assets include the Corporation's future tax benefits such as net operating losses or tax credit carryforwards. The Corporation must record a valuation allowance against any portion of a deferred income tax asset which it believes it will more likely than not fail to realize. Worldwide components of the Corporation's deferred income tax (liabilities) and assets at December 31, 1993 are as follows (in thousands): Deferred Tax Liabilities: Accelerated tax depreciation deducted in excess of book depreciation.... $(40,940) Mine development costs deducted for tax in excess of book amortization......................................................... (11,738) Depletion of the cost of land and mining claims for tax in excess of book amortization.................................................... (4,278) Other................................................................... (5,829) -------- Gross deferred tax liabilities....................................... (62,785) -------- Deferred Tax Assets: Investments in subsidiaries not consolidated for tax purposes........... 18,415 Reclamation costs not deducted in tax return............................ 6,282 Exploration costs not deducted in tax return............................ 40,196 Inventory costs capitalized for tax in excess of book capitalized costs................................................................ 6,471 Retiree benefit costs not deducted in tax return........................ 7,774 Other................................................................... 6,708 -------- Gross deferred tax assets............................................ 85,846 -------- Valuation allowance for deferred tax assets............................. (7,774) -------- Net deferred tax assets................................................. $ 15,287 -------- --------
Based upon estimates of future operations and tax planning strategies, the Corporation believes that it more likely than not will utilize $78.0 million of the $85.8 million of gross deferred income tax assets at December 31, 1993, reflecting a valuation allowance of $7.8 million. The Corporation gives no outright assurance that it will generate sufficient taxable income to fully realize the remaining $78.0 of gross deferred income tax assets. Future levels of taxable income are dependent, in part, upon gold prices, general economic conditions and other factors beyond the Corporation's control. Pre-tax financial statement income before the cumulative effect of changes in accounting principles consists of (in thousands):
YEARS ENDED DECEMBER 31, -------------------------------- 1993 1992 1991 -------- -------- -------- Domestic............................................. $111,656 $117,554 $150,158 Foreign.............................................. 12,691 (16,575) (15,485) -------- -------- -------- $124,347 $100,979 $134,673 -------- -------- -------- -------- -------- --------
36 38 NEWMONT MINING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) On August 10, 1993, President Clinton signed into law the Revenue Reconciliation Act of 1993, raising the federal corporate income tax rate from 34% to 35% (retroactive to January 1, 1993). The Corporation's provisions for income taxes before the cumulative effect of changes in accounting principles consist of (in thousands):
YEARS ENDED DECEMBER 31, ---------------------------------- 1993 1992 1991 ---------- -------- -------- (SFAS 109) (APB 11) ---------- -------------------- Current: Domestic.......................................... $ 43,084 $ 26,959 $ 44,131 Foreign........................................... 1,369 462 464 ---------- -------- -------- 44,453 27,421 44,595 ---------- -------- -------- Deferred: Domestic.......................................... (26,200) (24,643) (16,655) Foreign........................................... -- -- -- Adjustment in net deferred tax liabilities for change in tax rates............................ 312 -- -- ---------- -------- -------- (25,888) (24,643) (16,655) ---------- -------- -------- $ 18,565 $ 2,778 $ 27,940 ---------- -------- -------- ---------- -------- --------
In accordance with APB 11, the Corporation's deferred income tax provisions (benefits) for 1992 and 1991, before the cumulative effect of a change in accounting principle, consists of (in thousands):
YEARS ENDED DECEMBER 31, --------------------- 1992 1991 -------- -------- Excess depreciation deducted in tax returns.................... $(15,037) $ (5,379) Net gains recognized in tax return, recognized previously for financial statement purposes................................. -- (10,035) Relocation costs not deducted in tax returns................... 863 922 Excess mine development and exploration costs deducted in tax returns............................................... (13,615) (1,163) Costs capitalized to inventory................................. 2,136 527 Other.......................................................... 1,010 (1,527) -------- -------- $(24,643) $(16,655) -------- -------- -------- --------
The provisions for income taxes before the cumulative effect of changes in accounting principles differ from the amounts computed by applying the U.S. corporate income tax statutory rate for the following reasons (in thousands):
YEARS ENDED DECEMBER 31, ----------------------------------- 1993 1992 1991 ---------- -------- -------- (SFAS 109) (APB 11) ---------- --------------------- U.S. corporate income tax at statutory rate........ $ 43,521 $ 34,333 $ 45,789 Percentage depletion............................... (26,191) (22,677) (29,594) Non-taxable portion of dividends received from domestic corporations............................ (474) (384) (3,031) Undistributed income of, losses of and dividends received from subsidiaries and affiliates........ (574) (8,977) 12,250 Other.............................................. 2,283 483 2,526 ---------- -------- -------- $ 18,565 $ 2,778 $ 27,940 ---------- -------- -------- ---------- -------- --------
37 39 NEWMONT MINING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Included in other long-term liabilities at December 31, 1993 and 1992 is $36.8 million and $32.0 million, respectively, of income taxes payable. In 1991, the Corporation credited retained earnings approximately $35 million for previously provided deferred income taxes. These deferred income taxes related to a former subsidiary whose stock was distributed to the Corporation's shareholders in a prior year. At that time, the distribution reduced retained earnings. (6) DEBT LONG-TERM DEBT Long-term debt consists of (in thousands):
AT DECEMBER 31, --------------------- 1993 1992 -------- -------- 8 5/8% notes................................................... $150,000 $150,000 Medium-term notes.............................................. 42,000 27,000 Gold loan...................................................... -- 88,689 -------- -------- 192,000 265,689 Less current maturities........................................ -- (88,689) -------- -------- $192,000 $177,000 -------- -------- -------- --------
8 5/8% Notes In April 1992, the Corporation issued unsecured notes with a principal amount of $150 million due April 1, 2002 bearing an annual interest rate of 8 5/8%. Interest is payable semi-annually in April and October and the notes are not redeemable prior to maturity. Using interest rates prevailing on similar instruments at December 31, 1993 and 1992, this debt was estimated to have a fair value of $170.7 million and $157.7 million, respectively. Medium-term Notes Beginning in May 1992, the Corporation began issuing notes under its medium-term note program. Notes totalling $42 million and $27 million with a weighted average interest rate of 7.7% and 7.9% maturing on various dates ranging from mid-1999 to late 2004 were outstanding as of December 31, 1993 and December 31, 1992, respectively. Using the interest rates prevailing on similar instruments at December 31, 1993 and 1992, this debt was estimated to have a fair value of $45.6 million and $27.2 million at those respective dates. Gold Loan In 1988, the Corporation entered into a loan agreement with a group of lenders under which one million ounces of gold were borrowed and the obligation was monetized for $448.8 million. The borrowings were repaid in 16 equal quarterly installments of gold ounces with the final quarterly installment paid in December 1993. In April 1992, the Corporation entered into forward contracts to acquire the gold necessary to satisfy the final six quarterly installments due on the loan at an average price of $355 per ounce. The difference between the forward contract values and the monetized amount of the gold loan was reflected as deferred revenue on the balance sheet at December 31, 1992. Sales revenues of $23.5 million, $26.0 million and $20.9 million were recognized in 1993, 1992, and 1991, respectively, as the monetized amount of the repaid ounces was less than that at which the ounces were originally recorded. 38 40 NEWMONT MINING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Corporation paid interest in gold ounces at the lenders' gold base rate plus 0.5%. Interest was calculated on current market prices for gold. The gold interest rate averaged 1.9%, 1.4% and 2.0% in 1993, 1992, and 1991, respectively. The effective interest rate based upon the monetized value of the gold loan averaged 1.8%, 1.3% and 1.6% in 1993, 1992 and 1991, respectively. The Corporation paid a $1.8 million fee to the lenders upon origination of the loan which was amortized over the life of the agreement. Project Financing Facility The Corporation, through a wholly-owned subsidiary, is a 50% participant in a joint venture in the Republic of Uzbekistan. The other 50% participants are two entities of the Uzbekistan government. The joint venture was established to construct and operate a leaching facility to produce gold from low-grade ore. The project is expected to cost approximately $150 million. The joint venture has secured $105 million of project financing for the project from a consortium of banks. The loan is payable out of the proceeds of the project, beginning the earlier of six months after completion or July 20, 1996 in semi-annual installments over three years. The average interest rate on the loan is 2.25 percentage points over the London Interbank Borrowing Rate prior to completion of the project and 3.75 percentage points over the London Interbank Borrowing Rate after completion of the project. No amounts had been drawn under the loan at December 31, 1993. The Corporation has guaranteed one-half of the payment of any amounts due under the loan until the requirements of a specified completion test have been satisfied, at which time the loan will become non-recourse debt. Such completion test must be satisfied no later than October 1996. The Corporation has obtained political risk insurance coverage for its investment and loan guarantee in Uzbekistan. Revolving Credit Facility The Corporation has a revolving credit facility under which it may borrow up to $280 million. The revolving credit facility expires in April 1997. No amounts were drawn down under the facility in 1993 or 1992. Interest rates are variable at the lenders' base rate plus 0.3% until May 1995 and 0.425% thereafter. The Corporation has the option to fix the rate for up to six months. There is an annual facility fee of 0.2% on the lenders' total commitment. The Corporation's revolving credit facility contains covenants limiting consolidated indebtedness, as defined, to $750 million and requiring a minimum net worth. The minimum net worth requirement was $225 million in 1993 and increases $25 million annually. Also, as of December 31, 1993, the payment of future dividends to common and preferred stockholders was limited to $173.6 million. Dollar/Gold Debt Swaps During 1989 and 1990, the Corporation entered into dollar/gold debt swaps for a total notional principal amount of $150 million and 383,400 ounces of gold. Upon termination of a swap, the Corporation was required to deliver the number of gold ounces involved in return for payment by the counterparty of the notional principal amount involved. The effect of a swap was to convert dollar denominated debt into gold denominated debt which, on average, had a significantly lower interest rate than dollar denominated debt. In early 1991, the Corporation terminated a $50 million swap covering 127,700 ounces of gold and recognized $5.2 million of revenue. In 1992, the Corporation terminated its remaining $100 million of swaps covering 255,800 ounces of gold and recognized $19.7 million of revenue. SHORT-TERM DEBT All short-term debt at December 31, 1993 and 1992 consisted of bank debt. The Corporation currently has unsecured demand bank lines of credit aggregating $16 million, of which $15.7 million and $10.9 million were outstanding at December 31, 1993 and 1992, respectively. These facilities bear interest at customary short-term rates for borrowers with similar credit ratings. The interest rates on this 39 41 NEWMONT MINING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) short-term bank debt averaged 6.0%, 6.1% and 8.5% in 1993, 1992 and 1991, respectively, and were 6.0% at December 31, 1993 and 1992. CAPITALIZED INTEREST Capitalized interest was $8.5 million and $2.4 million in 1993 and 1992, respectively. No interest was capitalized in 1991. (7) STOCKHOLDERS' EQUITY PREFERRED STOCK In the fourth quarter of 1992, the Corporation issued 2.875 million shares of $5.00 par value Convertible Preferred Stock at a price of $100 per share, which netted approximately $280 million after offering expenses. The $5.50 annual dividend per share is cumulative from the original issue date and is payable quarterly commencing March 15, 1993. The shares are convertible at any time at the option of the holder into shares of common stock of the Corporation at a conversion price of $36.395 for each share of common stock, subject to certain adjustments. The Convertible Preferred Stock is not redeemable prior to November 15, 1995. On and after such date it is redeemable, in whole or in part, at the option of the Corporation, at a beginning redemption price of $103.85 per share. Such redemption price then declines $0.55 per share annually until it reaches $100 per share on November 15, 2002, which is also the liquidation preference per share. The Convertible Preferred Stock ranks senior to the participating preferred stock (see "Preferred Share Purchase Rights") and, in general, does not have voting rights. The Convertible Preferred Stock was offered under Rule 144A and Regulation S under the U.S. Securities Act of 1933 and is therefore not registered under such act. The Convertible Preferred Stock is held by shareholders through depositary shares, each of which represents one-half of a share of the Convertible Preferred Stock and entitles the holder to all proportional rights and preferences of the Convertible Preferred Stock. COMMON STOCK RIGHTS Equal Value Rights In September 1987, the Board of Directors declared a dividend distribution of one Equal Value Right ("EVR") on each share of common stock outstanding on October 5, 1987. Each share issued subsequent to such date automatically receives an EVR. The EVRs, which are non-voting, expire in September 1997 unless redeemed earlier by the Corporation, and separate from the common shares effective with the public announcement (the "Control Date") that a person or group has acquired more than 50% of the common stock. Until an EVR is exercised, the holder thereof has no rights as a stockholder of the Corporation. Until the Control Date, the EVRs will be evidenced by the Corporation's common stock and will be transferred with and only with such certificates. In the event of a subsequent merger or other specified transaction by the Corporation, each EVR would entitle the holder, under certain circumstances, to receive from the Corporation an amount in cash equal to the amount by which the highest price per share paid by such acquirer within 91 days prior to and including the Control Date exceeds the fair market value of the consideration paid for each share of the Corporation's common stock in connection with the merger or other transaction. At any time prior to the Control Date, the Corporation may (but only with the concurrence of continuing directors) redeem the EVRs at a price of $0.02 per EVR. Preferred Share Purchase Rights In August 1990, the Board of Directors declared a dividend distribution of one preferred share purchase right ("PSPR") on each share of common stock outstanding on September 11, 1990. Each share issued subsequent to September 11, 1990 and prior to the "Distribution Date" referred to below (and in certain limited circumstances thereafter) will be issued with a PSPR. Each PSPR entitles the holder to purchase from the Corporation one five-hundredth of a share of participating preferred stock of the Corporation for 40 42 NEWMONT MINING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) $150, subject to adjustment. Prior to the Distribution Date, the PSPRs are not exercisable, will be evidenced by the Corporation's common stock certificates and will be transferred with and only with such certificates. The PSPRs expire in September 2000 unless earlier redeemed. Until a PSPR is exercised, the holder thereof has no rights as a stockholder of the Corporation. The Distribution Date, which is the date on which the PSPRs separate from the common stock and become exercisable, is the earlier of (i) ten days after the public announcement that a person or group (other than the Corporation's present shareholder groups subject to a standstill agreement dated as of December 7, 1990, as amended and certain related entities and their transferees, but only to the extent of their current share ownership) (an "Acquiring Person") has acquired 15% or more of the common stock (the date of such first public announcement being the "Stock Acquisition Date"), or (ii) ten business days after the commencement of a tender or exchange offer that would result in a person or group owning 15% or more of the common stock. If after the Distribution Date a person shall become an Acquiring Person (other than pursuant to certain offers approved by the Board of Directors) each holder of a PSPR (other than the Acquiring Person and, in certain circumstances, transferees of the Acquiring Person) will have the right to receive, upon exercise, common stock (or, in certain circumstances, cash, property or other securities of the Corporation) having a value equal to two times the purchase price of the PSPR. In addition, if after a Stock Acquisition Date the Corporation is not the surviving entity in certain business combinations, or 50% or more of the Corporation's assets or earning power is sold or transferred, each holder of a PSPR shall have the right to receive, upon exercise, common stock of the acquiring company having a value equal to two times the purchase price of the PSPR. Prior to the earlier of a Stock Acquisition Date or the expiration date of the PSPR, the Corporation, in certain circumstances with the approval of continuing directors, may redeem the PSPRs at a price of $0.01 per PSPR. Each one five-hundredth share of preferred stock is designed to have similar rights to one share of common stock. The preferred shares have a preferential quarterly dividend that is 500 times the dividends on the common stock, but in no event less than one dollar. The liquidation preference per preferred share is the greater of $500 (plus accrued dividends to the date of distribution) or an amount equal to 500 times the aggregate amount of dividends to be distributed per share to holders of the Corporation's common stock. In the event of a business combination in which shares of the Corporation's common stock are exchanged, each preferred share will be entitled to receive 500 times the amount and type of consideration received per share of common stock. Each preferred share will have 500 votes and vote together with the common stock. The preferred shares are not redeemable. (8) EMPLOYEE BENEFIT PLANS STOCK OPTION PLANS Under the Corporation's stock option plans, options to purchase shares of the Corporation are granted to key employees at the fair market value of such shares on the date of grant. The options under these plans are subject to certain restrictions, vest over a two year period and are exercisable over a period not exceeding ten years. At December 31, 1993, 1,398,890 shares were available for future grants under the Corporation's stock option plans. In 1993 and 1992 certain key executives were granted options that, although the exercise price is generally equal to the fair market value on the date of grant, cannot be exercised when vested until the market price of the Corporation's common stock is a defined amount above the option exercise price. In addition, the same executives were granted options in 1993 and 1992 whose exercise prices are in excess of the fair market value on the date of grant. Generally, these key executive options vest over a five year period and are exercisable over a ten year period. At December 31, 1993, 956,444 of these options were outstanding. 41 43 NEWMONT MINING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table summarizes annual stock option activity for the three years ended December 31, 1993:
1993 1992 1991 ------------------------- ------------------------ ------------------------ NUMBER OPTION PRICE NUMBER OPTION PRICE NUMBER OPTION PRICE OF SHARES PER SHARE OF SHARES PER SHARE OF SHARES PER SHARE ---------- ------------ --------- ------------ --------- ------------ Outstanding at beginning of year......... 2,418,991 $27.19-56.09 1,711,900 $27.19-38.66 1,506,615 $27.19-38.66 Granted.................................. 634,192 $37.56-56.09 1,256,524 $29.55-56.09 425,134 $31.40-31.65 Exercised................................ (758,533) $27.19-40.06 (444,588) $27.19-38.66 (122,749) $27.19-29.80 Canceled................................. (239,563) $27.19-56.09 (104,845) $28.24-38.66 (97,100) $27.19-38.66 ---------- ------------ --------- ------------ --------- ------------ Outstanding at end of year............... 2,055,087 $27.19-56.09 2,418,991 $27.19-56.09 1,711,900 $27.19-38.66 ---------- --------- --------- ---------- --------- ---------
At December 31, 1993, 738,777 options were exercisable. PENSION BENEFITS The Corporation has two qualified non-contributory defined benefit pension plans, one which covers salaried employees and the other which covers substantially all hourly-rated employees. The vesting period is five years of service for both plans. In addition, the Corporation has a non-qualified supplemental pension plan for salaried employees whose benefits under the qualified plan are limited by federal legislation. Pension costs are determined annually by independent actuaries and pension contributions to the qualified plans are made based on funding standards established under the Employee Retirement Income Security Act of 1974 ("ERISA"). The Corporation maintains a trust for the purpose of funding the supplemental pension plan as well as death benefits for officers of the Corporation. This trust is funded at the discretion of the Corporation and had a balance of $5.0 million and $4.8 million (which approximated market) at December 31, 1993 and 1992, respectively. Although the trust's assets can be used to pay benefits for the supplemental pension plan, they cannot be used in determining the net pension liability for the supplemental pension plan. The plans' benefit formulas are based on an employee's years of credited service and either such employee's last five years average pay (salaried plan) or a flat dollar amount (hourly plan). The qualifying plans' assets consist of stocks, bonds and cash. The components of pension expense for these three plans, in the aggregate, consist of (in thousands):
YEARS ENDED DECEMBER 31, ------------------------ 1993 1992 1991 ------ ------ ------ Service cost................................................. $2,854 $2,809 $2,467 Interest cost on projected benefit obligation................ 5,076 4,741 4,282 Return on assets............................................. (4,993) (5,049) (4,508) Amortization of unrecognized prior service cost and net accumulated losses less amortization of net transition asset...................................................... 254 167 (70) ------ ------ ------ Pension expense.............................................. $3,191 $2,668 $2,171 ------ ------ ------ ------ ------ ------
42 44 NEWMONT MINING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following tables set forth the funded status of the plans and the amounts recognized in the Corporation's consolidated balance sheets at December 31, 1993 and 1992, respectively (in thousands):
AT DECEMBER 31, 1993 ----------------------------------- SALARY HOURLY SUPPLEMENTAL PENSION PENSION SALARY PLAN PLAN PENSION PLAN -------- ------- ------------ Actuarial present value of benefit obligations: Accumulated benefit obligation -- Vested benefits........................................ $(50,329) $(3,577) $ (4,263) Non-vested benefits.................................... (1,644) (1,670) (42) -------- ------- ------------ (51,973) (5,247) (4,305) Effect of future salary increases......................... (5,411) -- (146) -------- ------- ------------ Projected benefit obligation................................ (57,384) (5,247) (4,451) Plan assets at fair value................................... 60,299 4,570 -- -------- ------- ------------ Plan assets greater (less) than projected benefit obligation................................................ 2,915 (677) (4,451) Unrecognized prior service cost............................. 22 153 -- Unrecognized net loss....................................... 1,256 221 5,861 Unrecognized net transition (asset) liability............... (3,146) (84) 3,103 Adjustment required to recognize minimum liability.......... -- -- (8,818) -------- ------- ------------ Net pension asset (liability)............................... $ 1,047 $ (387) $ (4,305) -------- ------- ------------ -------- ------- ------------
AT DECEMBER 31, 1992 --------------------------------- SALARY HOURLY SUPPLEMENTAL PENSION PENSION SALARY PLAN PLAN PENSION PLAN -------- ------- ------------ Actuarial present value of benefit obligations: Accumulated benefit obligation -- Vested benefits.......................................... $(43,500) $(2,292) $ (8,895) Non-vested benefits...................................... (2,500) (1,821) (100) -------- ------- ------------ (46,000) (4,113) (8,995) Effect of future salary increases........................... (6,215) -- (500) -------- ------- ------------ Projected benefit obligation.................................. (52,215) (4,113) (9,495) Plan assets at fair value..................................... 59,342 4,086 -- -------- ------- ------------ Plan assets greater (less) than projected benefit obligation.................................................. 7,127 (27) (9,495) Unrecognized prior service cost............................... 23 165 -- Unrecognized net (gain) loss.................................. (2,027) (160) 4,542 Unrecognized net transition (asset) liability................. (3,611) (90) 3,491 Adjustment required to recognize minimum liability............ -- -- (7,533) -------- ------- ------------ Net pension asset (liability)................................. $ 1,512 $ (112) $ (8,995) -------- ------- ------------ -------- ------- ------------
In accordance with the provisions of Statement of Financial Accounting Standards No. 87, an adjustment was required to reflect a minimum liability for the supplemental pension plan in 1992 and 1993. Such adjustment resulted in recording an intangible asset and, to the extent the minimum liability adjustment exceeded the unrecognized net transition liability, a reduction of $3.7 million and $2.7 million in stockholders' equity, which is net of related deferred income tax benefits, for 1993 and 1992, respectively. 43 45 NEWMONT MINING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The actuarial assumptions used were:
1993 1992 ---- ---- Weighted average discount rate...................................... 7.50% 7.75% Rate of increase in future compensation (applicable only to salaried plans)............................................................ 4.0% 4.0% Weighted average expected long-term rate of return on plan assets... 8.25% 9.25%
RETIREE BENEFITS OTHER THAN PENSIONS The Corporation provides defined medical benefits to qualified retirees who were salaried employees and their eligible dependents and it provides defined life insurance benefits to qualified retirees who were salaried employees. In general, participants become eligible for these benefits upon retirement directly from the Corporation if they are at least 55 years old and the combination of their age and years of service with the Corporation equals 75 or more. The defined medical benefits cover most of the reasonable and customary charges for hospital, surgical, diagnostic and physician services and prescription drugs. Life insurance benefits are based on a percentage of final base annual salary and decline over time after coverage begins. The Corporation adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" ("SFAS 106"), effective January 1, 1992. The statement requires that postretirement benefits other than pensions be accrued during an employee's service to the Corporation. Previously, the Corporation recorded the expense when benefit payments were made for retirees. The actuarially-determined accumulated postretirement benefit obligation ("APBO") calculated in accordance with SFAS 106 at January 1, 1992 was $17.6 million. This amount was expensed, net of related income tax benefits of $6.0 million, as a cumulative effect of a change in accounting principle. The components of expense for postretirement benefits other than pensions for 1993 and 1992, exclusive of the cumulative effect of adopting SFAS 106 as of January 1, 1992, are shown in the table below (in thousands):
YEARS ENDED DECEMBER 31, ---------------- 1993 1992 ------ ------ Service cost........................................................ $1,575 $1,410 Interest cost....................................................... 1,602 1,359 ------ ------ Expense for postretirement benefits other than pensions............. $3,177 $2,769 ------ ------ ------ ------
In 1991, the annual amount expensed for these benefits under the Corporation's prior accounting policy was insignificant. The following table sets forth the components of the liability for the Corporation's plans and the amounts carried on the Corporation's consolidated balance sheets (in thousands):
AT DECEMBER 31, ------------------ 1993 1992 ------- ------- Actuarial present value of accumulated benefit obligation: Retirees........................................................ $11,833 $10,504 Other fully eligible plan participants.......................... 2,128 1,629 Other active plan participants.................................. 10,261 7,838 ------- ------- 24,222 19,971 Unrecognized net loss........................................... (1,619) -- ------- ------- Accrued liability for postretirement benefits other than pensions........................................................ $22,603 $19,971 ------- ------- ------- -------
44 46 NEWMONT MINING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) At December 31, 1993 and 1992, $3.4 million and $3.6 million of assets, respectively, with market values of approximately the same amounts, were designated in a trust to pay postretirement benefits other than pensions. Since these assets could be used to pay other employee benefits, they cannot be used for the postretirement benefit calculations. The Corporation has no formal policy for funding postretirement benefit obligations. Weighted average discount rates of 7.50% and 7.75% were used in calculating the APBO at December 31, 1993 and 1992, respectively. The assumed health care cost trend rates to measure the expected cost of benefits at December 31, 1993 start at an 11% annual increase for coverage before the age of 65 and a 10% annual increase for coverage after the age of 64. These rates were assumed to decrease one percentage point each year until a 6% annual rate of increase was reached, at which point a 6% annual rate of increase was assumed thereafter. The effect of a one percentage point annual increase in the assumed cost trend rates would increase the aggregate of service and interest costs for 1993 by approximately 24% and the APBO by approximately 20%. SAVINGS PLAN The Corporation has two qualified defined contribution savings plans, one which covers salaried employees and the other which covers substantially all hourly-rated employees. In addition, the Corporation has a non-qualified supplemental savings plan for salaried employees whose benefits under the qualified plan are limited by federal regulations. After six months or one year of service for the salaried and hourly plans, respectively, the Corporation generally matches 100% of employee contributions up to 6% and 2% of base salary for the salaried and hourly plans, respectively (the hourly plan percentage increases to 4% as of January 1, 1994). The Corporation's matching contributions to the savings plans were $2.4 million, $2.3 million and $2.2 million in 1993, 1992 and 1991, respectively. SEVERANCE BENEFITS The Corporation has a Severance Pay Plan for salaried employees who are involuntarily terminated. In addition, the Corporation has employment agreements with certain key executives pursuant to which the Corporation would be liable for certain supplemental severance payments in the event such executives' employment is involuntarily terminated. The potential obligations arising from the employment agreements have been pre-funded through a trust. The trust balances of approximately $12.8 million and $12.4 million at December 31, 1993 and December 31, 1992, respectively, with similar market values, is included in other assets. (9) OTHER EXPENSES In December 1993, the Corporation announced that effective January 1, 1994, NGC would combine its operations with the Corporation by NGC acquiring all of the Corporation's non-NGC assets and liabilities. See Note 14 for additional information about this transaction. Costs related to the transaction of $3.5 million were expensed in 1993. The Corporation expensed $2.8 million, $3.8 million and $6.0 million in 1993, 1992 and 1991, respectively, when it wrote-down the carrying value of certain assets. The Corporation is involved in several matters concerning environmental obligations primarily associated with former mining activities, as discussed in Note 13. Included in other expenses for the years ended December 31, 1993 and December 31, 1991 are provisions of $6 million and $36 million, respectively, related to these matters. In 1991, there was a charge of $6 million primarily associated with delays in sub-leasing the Corporation's former office space in New York City. In addition, there was a charge of $5.1 million due to corporate-wide layoffs and certain organizational changes. 45 47 NEWMONT MINING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (10) GAIN ON SALE OF SECURITIES In May 1993, the Corporation sold its remaining 14% interest in Newcrest Mining Limited for $67 million and recognized a gain of $29.6 million. This interest was reflected as an asset held for sale at December 31, 1992. In 1991, the Corporation retired all of its 7% exchangeable debentures, due 2001, pursuant to the terms thereof by exchanging its entire investment in E.I. duPont de Nemours and Company ("duPont") common stock. A gain of $36.1 million was recognized on the disposal of the duPont stock. (11) MAJOR CUSTOMERS AND EXPORT SALES The Corporation is not economically dependent on a limited number of customers for the sale of its product, primarily gold, because gold commodity markets are well-established worldwide. During 1993 there were three customers which accounted for $105.0 million, $97.3 million and $78.3 million of total sales, each of which represented more than 10% of total sales and together accounted for 44% of the annual sales. In 1992, sales to two such major customers accounted for $126.8 million and $65.3 million, or 31% of total sales. In 1991, sales to two such major customers accounted for $152.6 million and $133.2 million, or 46% of total sales. Export sales were $269.3 million, $267.5 million and $212.4 million in 1993, 1992 and 1991, respectively. (12) SUPPLEMENTAL CASH FLOW INFORMATION Net cash provided by operating activities includes the following cash payments (in thousands):
YEARS ENDED DECEMBER 31, ------------------------------- 1993 1992 1991 ------- ------- ------- Income taxes.......................................... $62,873 $27,900 $73,529 Interest, net of amounts capitalized.................. $ 9,731 $ 9,636 $14,344
Excluded from the statements of consolidated cash flows are the effects of certain non-cash transactions. During 1992, NGC exchanged $10.6 million of employee housing property for $7.7 million of notes receivable and $2.9 million in cash. As discussed in Note 10, during 1991, holders of the Corporation's $77.6 million 7% exchangeable debentures exchanged such debentures for duPont shares, held by the Corporation as an investment, that had a book value of $40 million. (13) COMMITMENTS AND CONTINGENCIES ENVIRONMENTAL OBLIGATIONS The Corporation's mining and exploration activities are subject to various federal and state laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Corporation conducts its operations so as to protect the public health and environment and believes its operations are in compliance with all applicable laws and regulations. The Corporation has made, and expects to make in the future, expenditures to comply with such laws and regulations. The Corporation cannot predict such future expenditures. The Corporation is involved in several matters concerning environmental obligations primarily associated with former mining activities. Based upon the Corporation's best estimate of its liability for these matters, $62.7 million and $68.5 million were accrued at December 31, 1993 and 1992, respectively, excluding $16.8 million and $14.2 million at December 31, 1993 and 1992 respectively, of reclamation costs relating to currently producing mineral properties. The amounts are included in reclamation liabilities and other current liabilities on the consolidated balance sheets for the respective periods. Depending upon the ultimate resolution of these matters, the Corporation believes that it is reasonably possible that the liability for these matters could be as much as 60% greater or 20% lower than the amount accrued at December 31, 1993. 46 48 NEWMONT MINING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Corporation has recorded long-term receivables from third parties, primarily insurance companies, of $42.2 million and $41.2 million at December 31, 1993 and 1992, respectively, for both a portion of the costs previously expended and for the future liabilities estimated in connection with these matters. These amounts are considerably less than what the Corporation has or will claim from the insurance carriers. Substantially all of this amount is contested by the insurance companies involved. The Corporation is negotiating with some of its insurance carriers for past and future costs relating to certain of these matters. The insurance carriers have reserved their rights or disclaimed liability under their respective policies, and certain carriers have commenced declaratory judgement actions seeking to avoid coverage. The Corporation has commenced litigation seeking coverage from certain carriers. Although the Corporation cannot reasonably predict the outcome of these actions, it is nevertheless management's opinion that a substantial recovery of claimed costs will be made from the insurance carriers. The total receivables recognized represent the reasonably probable amount the Corporation expects to receive based upon its discussions with counsel. See Note 9 for certain charges taken related to these matters. The following is a discussion of the environmental obligations as of December 31, 1993. Idarado Mining Company ("Idarado") -- 80.1% owned In July 1992, the Corporation and Idarado signed a consent decree with the State of Colorado ("State") which was agreed to by the U.S. District Court of Colorado to settle a lawsuit brought by the State under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), generally referred to as the "Superfund Act." Idarado paid $5.35 million pursuant to this consent decree in August 1992 to settle natural resources damages, past and future response costs and to provide habitat enhancement work. In addition, Idarado agreed in the consent decree to undertake specified reclamation and remediation work related to its former mining activities in the Telluride/Ouray area of Colorado. The Corporation's best estimate of the cost of this work is included in the gross liability, as previously discussed. If the reclamation and remediation work does not meet certain measurement criteria specified in the consent decree, the State and court reserve the right to require Idarado to perform other reclamation and remediation work. Idarado and the Corporation have obtained a $16.3 million letter of credit to secure their obligations under the consent decree. Resurrection Mining Company ("Resurrection") -- 100% owned In 1983, the State of Colorado ("State") filed a lawsuit under the Superfund Act which involves a joint venture mining operation near Leadville, Colorado in which Resurrection is a joint venturer. This action was subsequently consolidated with a lawsuit filed by the United States Environmental Protection Agency ("EPA") in 1986. The EPA is taking the lead role on cleanup issues and the matters are now proceeding principally through the administrative processes of CERCLA, rather than through the court action. The proceedings seek to compel the defendants to remediate the impacts of pre-existing mining activities which the governments claim are causing substantial environmental problems in the area. The mining operations of the joint venture are operated by ASARCO, the other joint venturer. The governments have made the Corporation, Resurrection, the joint venture and ASARCO defendants in the proceedings. They are also proceeding against other companies with interests in the area. The EPA divided the remedial work into two phases. Phase I addresses a drainage and access tunnel owned by the joint venture -- the Yak Tunnel. Phase II addresses the remainder of the site. In 1988 and 1989, the EPA issued administrative orders with respect to Phase I work for the Yak Tunnel. The joint venture, ASARCO, Resurrection and the Corporation have collectively implemented those orders by constructing a water treatment plant which was placed in operation in early 1992. The joint venture is in negotiations regarding remaining remedial work for Phase I, which primarily consists of monitoring and environmental maintenance activities. In October 1993, Resurrection paid $4.4 million for its share of past response costs and interest through January 1991 for the United States and through January 1992 for the State. 47 49 NEWMONT MINING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The EPA has not yet completed work to define a remedy for Phase II and thus has not published a current estimate of the costs of such remedial action. Accordingly, the Corporation cannot yet determine the full extent or cost of remedial action which will be required under Phase II. Moreover, in addition to costs of remedial action, the governments will seek to recover future response costs to be incurred at the site and may seek to recover for damages to natural resources. The case currently involves other solvent defendant corporations. The allocation of costs and damages incurred or to be incurred at the site among those defendants, if any such allocation is to be made, cannot be determined at this time. Although the ultimate amount of total costs and Resurrection's and the Corporation's exposure for such costs for Phase I and Phase II cannot be presently determined, the Corporation's best estimate of its potential exposure for these costs is included in the gross liability for these matters, previously discussed. Dawn Mining Company ("Dawn") -- 51% owned Dawn leased a currently inactive open-pit uranium mine on the Spokane Indian Reservation in the State of Washington ("State"). The mine is subject to regulation by agencies of the United States Department of Interior, the Bureau of Indian Affairs ("BIA") and the Bureau of Land Management, as well as the EPA. Dawn also owns a nearby uranium millsite facility. In 1991, Dawn's lease was formally terminated. As a result, Dawn was required to file a formal reclamation plan. Dawn does not have sufficient funds to pay for such a reclamation plan or to pay for the closure of its mill. Dawn proposed to the State a mill closure plan which could potentially generate the necessary funds to reclaim the mine and the mill. The State notified Dawn that the proposed plan was not the State's preferred alternative and was not consistent with certain policy considerations of the State. At December 31, 1993, Dawn was in the process of revising its proposed mill closure plan so as to meet these State concerns. The Corporation's best estimate for the future costs related to these matters is included in the gross liability for environmental matters, previously discussed. The Department of Interior previously notified Dawn that when the lease was terminated, it would seek to hold Dawn and the Corporation (as Dawn's 51% owner) liable for any costs incurred as a result of Dawn's failure to comply with the lease and applicable regulations. The Corporation would vigorously contest any such claims. The Corporation cannot reasonably predict the likelihood or outcome of any future action against Dawn or the Corporation arising from this matter. GUARANTEE OF THIRD PARTY INDEBTEDNESS The Corporation guaranteed $35.7 million of Magma Copper Company's (a former subsidiary) Pollution Control Revenue Bonds due 2009. It is expected that the Corporation will be required to remain liable on this guarantee so long as the bonds relating thereto are outstanding. GUARANTEE OF PROJECT FINANCING INDEBTEDNESS The Corporation has a 38% interest in Minera Yanacocha S.A. ("Yanacocha"), a Peruvian gold operation which commenced operations in 1993. Yanacocha secured project financing of $31.2 million from a consortium of banks. The Corporation agreed to guarantee approximately $12.5 million of this amount until the earlier of the repayment of all amounts due pursuant to the project financing or the satisfaction of a project completion test. Yanacocha expects that the project completion test will be satisfied in early 1994. OTHER COMMITMENTS AND CONTINGENCIES In December 1992, NGC finalized an agreement with Barrick Goldstrike Mines, Inc. ("Barrick") which provides for Barrick to mine NGC's Post deposit which extends beyond NGC's property boundaries onto Barrick's property. NGC and Barrick share the costs so that each ounce of gold mined bears the same mining cost. NGC is obligated to pay Barrick for such costs as Barrick mines the deposit. In addition, NGC is obligated to share dewatering costs which are associated with NGC's Post deposit. The total of all such mining 48 50 NEWMONT MINING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) and dewatering costs were $26.2 million in 1993 and estimated to be $30 million to $40 million annually for the near future. In conjunction with the construction of its refractory ore treatment plant, NGC has entered into various contracts for the acquisition of equipment and related construction services. This plant is expected to cost approximately $300 million and be completed in the third quarter of 1994. At December 31, 1993, $158.2 million had been expended. The Corporation has minimum royalty obligations on one of its producing mines of 80,000 ounces of gold per year in 1994 and 1995, 55,000 ounces of gold in 1996 and no more than 40,000 ounces of gold per year thereafter for the life of the mine. The amount to be paid to meet the royalty obligations is based upon a defined average market gold price. Any amounts paid due to the minimum royalty obligation not being met in any year are recoverable in future years when the minimum royalty obligation is exceeded. The Corporation expects the mines' production will meet the minimum royalty requirements. The Corporation is involved from time to time in legal proceedings of a character incident to its business. It does not believe that adverse decisions in any pending or threatened proceedings or any amounts which it may be required to pay by reason thereof will have a material adverse effect on its financial condition or results of operations. (14) SUBSEQUENT EVENT Effective January 1, 1994, NGC acquired all of the Corporation's non-NGC assets and liabilities in a tax-free transaction. As a part of the transaction, the Corporation transferred 8,649,899 shares of NGC stock to NGC reducing the Corporation's interest in NGC to 89.2% from 90.1%. The transaction has no material impact on the Corporation's consolidated financial statements. As a result of the transaction, on March 21, 1994 the Corporation declared a 1.2481 shares to 1 share stock split so that the Corporation's outstanding shares would equate as close as possible to the 85,850,101 shares of NGC it holds subsequent to the transaction. 49 51 NEWMONT MINING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (15) UNAUDITED SUPPLEMENTARY DATA QUARTERLY DATA The following is a summary of selected quarterly financial information (amounts in millions except per share amounts):
1993 ---------------------------------------------------------------------- THREE MONTHS ENDED ------------------------------------------------------- YEAR ENDED MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 DECEMBER 31 -------- ------- ------------ ----------- ----------- Sales............................ $138.1 $ 157.3 $178.1 $ 160.8 $ 634.3 Gross profit(1).................. $ 32.7 $ 46.7 $ 60.5 $ 45.2 $ 185.1 Income from continuing operations before cumulative effect of change in accounting principle...................... $ 12.5 $ 39.5(3) $ 25.7 $ 16.9 $ 94.7 Cumulative effect of change in accounting principle........... $ 38.5(2) $ -- $ -- $ -- $ 38.5 Net income....................... $ 51.0 $ 39.5 $ 25.7 $ 16.9 $ 133.1 Preferred stock dividends........ $ (4.0) $ (3.9) $ (4.0) $ (4.0) $ (15.9) Net income applicable to common stock.......................... $ 47.0 $ 35.6 $ 21.7 $ 12.9 $ 117.2 Earnings per common share: Continuing operations before cumulative effect of change in accounting principle..... $ 0.10 $ 0.42(3) $ 0.26 $ 0.14 $ 0.92 Cumulative effect of change in accounting principle........ $ 0.45(2) $ -- $ -- $ -- $ 0.45 Net income per common share.... $ 0.55 $ 0.42 $ 0.26 $ 0.14 $ 1.37 Weighted average shares outstanding.................... 85.1 85.5 85.6 85.6 85.5 Dividends declared per common share.......................... $ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.48
50 52 NEWMONT MINING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1992 ---------------------------------------------------------------------- THREE MONTHS ENDED ------------------------------------------------------- YEAR ENDED MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 DECEMBER 31 -------- ------- ------------ ----------- ----------- Sales............................ $ 157.7 $ 158.8 $155.8 $ 140.9 $ 613.2 Gross profit(1).................. $ 60.6 $ 50.1 $ 47.1 $ 33.4 $ 191.2 Income from continuing operations before cumulative effect of change in accounting principle...................... $ 44.0 $ 24.4 $ 18.3 $ 3.9 $ 90.6 Cumulative effect of change in accounting principle........... $ (11.6 )(4) $ -- $ -- $ -- $ (11.6) Net income....................... $ 32.4 $ 24.4 $ 18.3 $ 3.9 $ 79.0 Preferred stock dividends........ $ -- $ -- $ -- $ (1.7) $ (1.7) Net income applicable to common stock.......................... $ 32.4 $ 24.4 $ 18.3 $ 2.2 $ 77.3 Earnings (loss) per common share: Continuing operations before cumulative effect of change in accounting principle..... $ 0.52 $ 0.29 $ 0.21 $ 0.02 $ 1.04 Cumulative effect of change in accounting principle........ $ 0.14 (4) $ -- $ -- $ -- $ 0.14 Net income per common share.... $ 0.38 $ 0.29 $ 0.21 $ 0.02 $ 0.90 Weighted average shares outstanding.................... 84.9 84.9 85.1 85.1 85.0 Dividends declared per common share.......................... $ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.48
- --------------- (1) Sales less costs applicable to sales and depreciation, depletion and amortization. (2) Cumulative effect of change in accounting for income taxes (see Note 5). (3) Includes after tax gain related to the sale of Newcrest Mining Limited interest of $19.3 million, or $0.22 per share. (4) Cumulative effect of change in accounting for postretirement benefits other than pensions (see Note 8) net of income tax benefit of $6.0 million, or $0.07 per share. RATIO OF EARNINGS TO FIXED CHARGES The ratios of earnings to fixed charges were 6.3, 6.5, 10.3, 6.6 and 2.2 for the years ended December 31, 1993, 1992, 1991, 1990 and 1989, respectively. The Corporation guarantees certain third party debt which had total interest obligations of $0.8 million, $3.3 million, $4.0 million, $4.5 million and $5.0 million for the years ended December 31, 1993, 1992, 1991, 1990 and 1989, respectively. The Corporation has not been required to pay any of these amounts, nor does it expect to have to pay any amounts; therefore, such amounts have not been included in the ratio of earnings to fixed charges. 51 53 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no disagreements with Arthur Andersen & Co., Newmont's independent public accountants, regarding any matter of accounting principles or practices or financial statement disclosure. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information concerning Newmont's directors will be contained in Newmont's definitive Proxy Statement to be filed pursuant to Regulation 14A promulgated under the Securities Exchange Act of 1934 for the 1994 annual meeting of stockholders and is incorporated herein by reference. Information concerning Newmont's executive officers is set forth under Part I of this report. ITEM 11. EXECUTIVE COMPENSATION Information concerning this item will be contained in Newmont's definitive Proxy Statement to be filed pursuant to Regulation 14A promulgated under the Securities Exchange Act of 1934 for the 1994 annual meeting of stockholders and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Information concerning this item will be contained in Newmont's definitive Proxy Statement to be filed pursuant to Regulation 14A promulgated under the Securities Exchange Act of 1934 for the 1994 annual meeting of stockholders and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Information concerning this item will be contained in Newmont's definitive Proxy Statement to be filed pursuant to Regulation 14A promulgated under the Securities Exchange Act of 1934 for the 1994 annual meeting of stockholders and is incorporated herein by reference. 52 54 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) The following documents are filed as a part of this report: 1. Financial Statements
10-K PAGE ---- Management's Report...................................................... 27 Report of Independent Public Accountants................................. 28 Statements of Consolidated Income........................................ 29 Consolidated Balance Sheets.............................................. 30 Statements of Consolidated Changes in Stockholders' Equity............... 31 Statements of Consolidated Cash Flows.................................... 32 Notes to Consolidated Financial Statements............................... 33 2. Financial Statement Schedules Report of Independent Public Accountants on Schedules.................... S-1 Schedule V -- Property, Plant and Mine Development..................... S-2 Schedule VI -- Accumulated Depreciation, Depletion and Amortization of Property, Plant and Mine Development..................... S-3 Schedule IX -- Short-Term Borrowings.................................... S-4 Schedule X -- Supplementary Income Statement Information............... S-5
All other schedules have been omitted since they are either not required, are not applicable, or the required information is shown in the financial statements or related notes. 3. Exhibits 3(a). Restated Certificate of Incorporation dated as of July 13, 1987. Incorporated by reference to Exhibit 3 to registrant's Form 10-K for the year ended December 31, 1987. 3(b). By-Laws as amended through November 1, 1993 and adopted November 1, 1993. 3(c). Certificate of Designations, Preferences and Rights of $5.50 Convertible Preferred Stock, $5 par value, dated November 13, 1992. Incorporated by reference to Exhibit (3)c to registrant's Form 10-K for the year ended December 31, 1992. 4(a). Rights Agreement dated as of September 23, 1987 between registrant and Manufacturers Hanover Trust Company as Equal Value Agent relating to the Equal Value Rights. Incorporated by reference to Exhibit 1 to registrant's Registration Statement on Form 8-A dated September 25, 1987. 4(b). First Amendment dated as of October 1, 1987 amending the Rights Agreement dated as of September 23, 1987 between registrant and Manufacturers Hanover Trust Company, as Rights Agent. Incorporated by reference to Exhibit (4)b to registrant's Form 10-K for the year ended December 31, 1990. 4(c). Second Amendment dated as of May 1, 1989 amending the Rights Agreement dated as of September 23, 1987 between registrant and Manufacturers Hanover Trust Company, as Rights Agent. Incorporated by reference to Exhibit 1 to registrant's Form 8 dated June 7, 1989. 4(d). Rights Agreement dated August 30, 1990 between registrant and Manufacturers Hanover Trust Company, as Rights Agent. Incorporated by reference to Exhibit 1 to registrant's Registration Statement on Form 8-A dated August 31, 1990.
53 55 4(e). and 4(f). First Amendment dated November 27, 1990 and Second Amendment dated December 7, 1990 to the aforementioned Rights Agreement dated August 30, 1990. Incorporated by reference to Exhibits 2 and 3, respectively, to registrant's Form 8 dated December 7, 1990. 4(g). Third Amendment dated February 26, 1992 to the aforementioned Rights Agreement dated August 30, 1990. Incorporated by reference to Exhibit 4 to registrant's Form 8 dated March 17, 1992. 4(h). Indenture dated March 23, 1992 between registrant and Bank of Montreal Trust Company. Incorporated by reference to Exhibit 4 to registrant's Form 10-Q for the quarter ended June 30, 1992. 4(i). Deposit Agreement dated as of November 15, 1992 to registrant, Chemical Bank, as Depositary and all holders from time to time of depositary receipts issued thereunder. Incorporated by reference to Exhibit 4(j) to registrant's Registration Statement on Form S-3 (File No. 33-65274). 10(a). Pension Plan as amended and in effect on January 1, 1991. Incorporated by reference to Exhibit (10)a to registrant's Form 10-Q for the quarter ended March 31, 1993. 10(b). Pension Equalization Plan as amended as of August 18, 1987. Incorporated by reference to Exhibit (10)b to registrant's Form 10-K for the year ended December 31, 1987. 10(c). Annual Incentive Compensation Plan. Incorporated by reference to Exhibit (10)c to registrant's Form 10-K for the year ended December 31, 1992. 10(d). 1982 Key Employees Stock Option Plan. Incorporated by reference to Exhibit to registrant's Registration Statement on Form S-8 (No. 33-10141). 10(e). 1987 Key Employees Stock Option Plan as amended as of October 25, 1993. 10(f). Agreement dated as of December 7, 1990 among registrant, SP Gold Holdings Inc., Holdgold, Inc., Hornwood Investments N.V., James M. Goldsmith, Jacob Rothschild, St. James Place Capital, plc and RIT Capital Partners plc. Incorporated by reference to Exhibit (28)(i) to registrant's Current Report on Form 8-K dated December 7, 1990. 10(g). Amendment dated May 10, 1993 to the Agreement dated as of December 7, 1990 among registrant, SP Gold Holdings Inc., Holdgold Inc., Hornwood Investments N.V., James M. Goldsmith, Jacob Rothschild, St. James Place Capital, plc and RIT Capital Partners plc. Incorporated by reference to Exhibit 28(b) to registrant's Registration Statement on Form S-3 (File No. 33-65274). 10(h). Agreement dated as of May 10, 1993 among registrant, George Soros, Soros Fund Management, Stanley F. Druckenmiller, Duquesne Capital Management, Inc., Quantum Fund N.V., Quasar International Partners C.V. and Quota Fund N.V. Incorporated by reference to Exhibit 28(c) to registrant's Registration Statement on Form S-3 (File No. 33-65274). 10(i). Severance Pay Plan as amended and restated effective May 1, 1993. Incorporated by reference to Exhibit (10)b to registrant's Form 10-Q for the quarter ended March 31, 1993. 10(j). Executive Insurance Benefit Plan. Incorporated by reference to Exhibit (10)m to registrant's Form 10-K for the year ended December 31, 1987. 10(k). Form of Agreement dated as of January 3, 1990 entered into between registrant and its executive officers and those of NGC named therein. Incorporated by reference to Exhibit (10)l to registrant's Form 10-K for the year ended December 31, 1989.
54 56 10(l). Agreement dated as of August 24, 1987, as amended effective October 26, 1988, between registrant and T. Peter Philip. Incorporated by reference to Exhibit (10)p to registrant's Form 10-K for the year ended December 31, 1988. 10(m). Amendment dated January 7, 1991 to Agreement dated as of August 24, 1987, as amended, between registrant and T. Peter Philip. Incorporated by reference to Exhibit (10)q to registrant's Form 10-K for the year ended December 31, 1990. 10(n). Management Services Agreement dated as of January 1, 1989 between registrant and NGC. Incorporated by reference to registrant's Exhibit 28(a) to Current Report on Form 8-K dated November 20, 1989. 10(o). Directors' Stock Award Plan. Incorporated by reference to Exhibit (10)o to registrant's Form 10-K for the year ended December 31, 1992. 10(p). 1992 Key Employees Stock Plan as amended as of October 25, 1993. 10(q). Agreement dated October 15, 1993, effective November 1, 1993, of registrant, NGC and Ronald C. Cambre. Incorporated by reference to Exhibit (10) to registrant's Form 10-Q for the quarter ended September 30, 1993. 10(r). Letter Agreement dated December 15, 1993, between NGC and registrant. Incorporated by reference to Exhibit A to NGC's Proxy Statement dated February 16, 1994. 10(s). Consultation Agreement dated as of October 31, 1993 between registrant, NGC and Gordon R. Parker. 10(t). Amendment dated December 15, 1993 to the Pension Plan as amended and in effect on January 1, 1991. 11. Statement re Computation of Per Share Earnings. 12. Statement re Computation of Ratio of Earnings to Fixed Charges. 21. Subsidiaries of registrant. 23. Consent of Independent Public Accountants. 24. Power of Attorney.
(b) Reports on Form 8-K No reports on Form 8-K were filed by the registrant during the quarter ended December 31, 1993. 55 57 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES To Newmont Mining Corporation: We have audited in accordance with generally accepted auditing standards, the consolidated financial statements of Newmont Mining Corporation and subsidiaries included in this Form 10-K, and have issued our report thereon dated January 25, 1994. Our audits were made for the purpose of forming an opinion on those statements taken as a whole. The schedules listed in the accompanying index are the responsibility of the Corporation's management and are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic consolidated financial statements. These schedules have been subjected to the auditing procedures applied in the audits of the basic consolidated financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole. /s/ ARTHUR ANDERSEN & CO. Arthur Andersen & Co. Denver, Colorado January 25, 1994 S-1 58 SCHEDULE V NEWMONT MINING CORPORATION AND SUBSIDIARIES PROPERTY, PLANT AND MINE DEVELOPMENT FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991 (IN THOUSANDS)
BALANCE OTHER AT CHANGES- BALANCE BEGINNING ADDITIONS ADDITIONS AT END DESCRIPTION OF PERIOD AT COST RETIREMENTS (DEDUCTIONS) OF PERIOD - ------------------------------------------------ --------- --------- ----------- ------------ --------- 1993 Land and mining claims........................ $ 71,030 $ 4,270 $ (6,542) $ (3) $ 68,755 Buildings and equipment....................... 748,850 44,433 (9,107) (105) 784,071 Mine development costs........................ 175,170 29,201 (1,557) -- 202,814 Construction in progress...................... 87,456 147,613 (2,376) -- 232,693 Capitalized mining costs...................... 5,150 23,603 -- -- 28,753 ---------- --------- ----------- ------------ ---------- $1,087,656 $ 249,120 $ (19,582) $ (108) $1,317,086 ---------- --------- ----------- ------------ ---------- ---------- --------- ----------- ------------ ---------- 1992 Land and mining claims........................ $ 46,733 $ 25,311 $ (1,024) $ 10 $ 71,030 Buildings and equipment....................... 683,238 103,955 (38,333) (10) 748,850 Mine development costs........................ 128,223 47,408 -- (461) 175,170 Construction in progress...................... 51,846 115,352 (79,742) -- 87,456 Capitalized mining costs...................... -- 5,150 -- -- 5,150 ---------- --------- ----------- ------------ ---------- $ 910,040 $ 297,176 $ (119,099) $ (461) $1,087,656 ---------- --------- ----------- ------------ ---------- ---------- --------- ----------- ------------ ---------- 1991 Land and mining claims........................ $ 42,743 $ 4,065 $ (75) $ -- $ 46,733 Buildings and equipment....................... 667,404 33,608 (17,774) -- 683,238 Mine development costs........................ 117,130 15,387 (4,294) -- 128,223 Construction in progress...................... 11,124 62,996 (22,274) -- 51,846 ---------- --------- ----------- ------------ ---------- $ 838,401 $ 116,056 $ (44,417) $ -- $ 910,040 ---------- --------- ----------- ------------ ---------- ---------- --------- ----------- ------------ ----------
S-2 59 SCHEDULE VI NEWMONT MINING CORPORATION AND SUBSIDIARIES ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND MINE DEVELOPMENT FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991 (IN THOUSANDS)
BALANCE ADDITIONS OTHER AT CHARGED TO CHANGES -- BALANCE BEGINNING COSTS AND ADDITIONS AT END OF DESCRIPTION OF PERIOD EXPENSES RETIREMENTS (DEDUCTIONS) PERIOD - ---------------------------------- --------- ---------- ----------- ------------ --------- 1993 Land and mining claims.......... $ 17,700 $ 896 $ (4,888) $ -- $ 13,708 Building and equipment.......... 332,662 88,400 (7,021) -- 414,041 Mine development costs.......... 75,122 21,242 (1,557) -- 94,807 --------- ---------- ----------- ------------ --------- $ 425,484 $110,538 $ (13,466) $ -- $ 522,556 --------- ---------- ----------- ------------ --------- --------- ---------- ----------- ------------ --------- 1992 Land and mining claims.......... $ 16,838 $ 862 $ -- $ -- $ 17,700 Buildings and equipment......... 288,479 68,684 (23,716) (785)(1) 332,662 Mine development costs.......... 50,845 23,492 -- 785 (1) 75,122 --------- ---------- ----------- ------------ --------- $ 356,162 $ 93,038 $ (23,716) $ -- $ 425,484 --------- ---------- ----------- ------------ --------- --------- ---------- ----------- ------------ --------- 1991 Land and mining claims.......... $ 16,104 $ 1,038 $ (304) $ -- $ 16,838 Buildings and equipment......... 222,591 76,659 (12,915) 2,144 (2) 288,479 Mine development costs.......... 35,686 16,407 (1,248) -- 50,845 --------- ---------- ----------- ------------ --------- $ 274,381 $ 94,104 $ (14,467) $2,144 $ 356,162 --------- ---------- ----------- ------------ --------- --------- ---------- ----------- ------------ ---------
- --------------- (1) Reclass between mine development costs and buildings and equipment accumulated depreciation, depletion and amortization. (2) Write-down of employee housing. S-3 60 SCHEDULE IX NEWMONT MINING CORPORATION AND SUBSIDIARIES SHORT-TERM BORROWINGS FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991 (DOLLAR AMOUNTS IN THOUSANDS)
MAXIMUM AVERAGE WEIGHTED WEIGHTED AMOUNT AMOUNT AVERAGE BALANCE AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE CATEGORY OF AGGREGATE AT END OF INTEREST DURING DURING DURING SHORT-TERM BORROWINGS PERIOD RATE PERIOD PERIOD(1) PERIOD(2) - ------------------------------------------------- --------- -------- ----------- ----------- ------------- 1993 Bank loan, due on demand....................... $15,739 6.0% $15,739 $13,340 6.0% 1992 Bank loan, due on demand....................... $10,941 6.0% $10,941 $10,939 6.1% 1991 Bank loan, due on demand....................... $10,913 6.5% $10,913 $ 9,879 8.5%
- --------------- (1) The sum of the amounts outstanding at each period (day or month-end) divided by the total number of periods during the year. (2) The total interest expense applicable to the amounts outstanding at each period (day or month-end) divided by the average balance owing for those periods. S-4 61 SCHEDULE X NEWMONT MINING CORPORATION AND SUBSIDIARIES SUPPLEMENTARY INCOME STATEMENT INFORMATION* FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991 (IN THOUSANDS)
CHARGED TO INCOME ------------------------------ ITEM 1993 1992 1991 - --------------------------------------------------------------- ------- -------- ------- Maintenance and repairs........................................ $92,496 $101,488 $89,168 ------- -------- ------- ------- -------- ------- Royalties...................................................... $47,913 $ 47,094 $51,454 ------- -------- ------- ------- -------- ------- Taxes, other than payroll and income taxes Net proceeds of mines........................................ $ 7,436 $ 8,763 $ 9,298 Other........................................................ 17,839 15,971 9,776 ------- -------- ------- $25,275 $ 24,734 $19,074 ------- -------- ------- ------- -------- ------- Amortization of debt issuance costs............................ $ 1,191 $ 749 $ 791 ------- -------- ------- ------- -------- -------
- --------------- * Excludes amortization of mine development costs which are included on Schedule VI. S-5 62 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NEWMONT MINING CORPORATION By /s/ TIMOTHY J. SCHMITT Timothy J. Schmitt Vice President, Secretary and Assistant General Counsel March 29, 1994 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
SIGNATURE TITLE DATE - --------------------------------------------- ---------------------------- ------ * Chairman and Director Gordon R. Parker * Director Rudolph I. J. Agnew * Director John P. Bolduc * Vice Chairman and Chief Ronald C. Cambre Executive Officer and Director * Director Joseph P. Flannery * Director Thomas A. Holmes * President and Chief March 29, 1994 T. Peter Philip Operating Officer and Director * Director Robin A. Plumbridge * Director William I. M. Turner, Jr. * Senior Vice President and Wayne W. Murdy Chief Financial Officer (Principal Financial Officer) * Vice President and Gary E. Farmar Controller (Principal Accounting Officer) *By /s/ TIMOTHY J. SCHMITT Timothy J. Schmitt as Attorney-in-fact
63 Appendix I The following is a narrative description of certain maps in image form which have been included in the paper version of the Form 10-K but which have been excluded from the EDGAR version of the Form 10-K. 1. Map of Location of the Carlin Trend Operations in Nevada -- Page 5 of the Form 10-K. On page 5 of the Form 10-K, the registrant has included a map of Nevada with an enlargement of the geographical location of its operations on the Carlin Trend discussed on page 4 of the Form 10-K. The map also includes a chart indicating the location of various deposits including those without proven and probable reserves. 2. Map of Location of the Yanacocha Project in Peru -- Page 6 of the Form 10-K. On page 6 of the Form 10-K, the registrant has included a map of the Country of Peru showing the geographical location of the Yanacocha project discussed on page 6 of the Form 10-K. The map also includes a notation that Minera Yanacocha S.A., the Peruvian corporation which owns and operates the Yanacocha project, is 38% owned by Newmont Gold. 3. Map of Location of the Zarafshan-Newmont Project in Uzbekistan -- Page 7 of the Form 10-K. On page 7 of the Form 10-K, the registrant has included a map of the Republic of Uzbekistan showing the geographical location of the Zarafshan-Newmont project discussed on pages 6-7 of the Form 10-K. The map also includes a notation that the Zarafshan-Newmont joint venture, which operates the project, is 50% owned by Newmont Gold. 4. Map of Locations of the Minahasa Project and the Batu Hijau Project in Indonesia -- Page 8 of the Form 10-K. 64 On page 8 of the Form 10-K, the registrant has included a map of the Republic of Indonesia showing the geographical location of the Minahasa project and the Batu Hijau project, each of which is discussed on pages 7-8 of the Form 10-K. The map also includes a notation that each of the Indonesian companies that operate the Minahasa project and the Batu Hijau project is 80% owned by Newmont Gold. 5. Map of Location of the Grassy Mountain Project in Oregon -- Page 9 of the Form 10-K. On page 9 of the Form 10-K, the registrant has included a map of Oregon and bordering states showing the geographical location of the Grassy Mountain project discussed on pages 8-9 of the Form 10-K. 65 EXHIBIT INDEX 3(a). Restated Certificate of Incorporation dated as of July 13, 1987. Incorporated by reference to Exhibit 3 to registrant's Form 10-K for the year ended December 31, 1987. 3(b). By-Laws as amended through November 1, 1993 and adopted November 1, 1993. 3(c). Certificate of Designations, Preferences and Rights of $5.50 Convertible Preferred Stock, $5 par value, dated November 13, 1992. Incorporated by reference to Exhibit (3)c to registrant's Form 10-K for the year ended December 31, 1992. 4(a). Rights Agreement dated as of September 23, 1987 between registrant and Manufacturers Hanover Trust Company as Equal Value Agent relating to the Equal Value Rights. Incorporated by reference to Exhibit 1 to registrant's Registration Statement on Form 8-A dated September 25, 1987. 4(b). First Amendment dated as of October 1, 1987 amending the Rights Agreement dated as of September 23, 1987 between registrant and Manufacturers Hanover Trust Company, as Rights Agent. Incorporated by reference to Exhibit (4)b to registrant's Form 10-K for the year ended December 31, 1990. 4(c). Second Amendment dated as of May 1, 1989 amending the Rights Agreement dated as of September 23, 1987 between registrant and Manufacturers Hanover Trust Company, as Rights Agent. Incorporated by reference to Exhibit 1 to registrant's Form 8 dated June 7, 1989. 4(d). Rights Agreement dated August 30, 1990 between registrant and Manufacturers Hanover Trust Company, as Rights Agent. Incorporated by reference to Exhibit 1 to registrant's Registration Statement on Form 8-A dated August 31, 1990.
66 4(e). and 4(f). First Amendment dated November 27, 1990 and Second Amendment dated December 7, 1990 to the aforementioned Rights Agreement dated August 30, 1990. Incorporated by reference to Exhibits 2 and 3, respectively, to registrant's Form 8 dated December 7, 1990. 4(g). Third Amendment dated February 26, 1992 to the aforementioned Rights Agreement dated August 30, 1990. Incorporated by reference to Exhibit 4 to registrant's Form 8 dated March 17, 1992. 4(h). Indenture dated March 23, 1992 between registrant and Bank of Montreal Trust Company. Incorporated by reference to Exhibit 4 to registrant's Form 10-Q for the quarter ended June 30, 1992. 4(i). Deposit Agreement dated as of November 15, 1992 to registrant, Chemical Bank, as Depositary and all holders from time to time of depositary receipts issued thereunder. Incorporated by reference to Exhibit 4(j) to registrant's Registration Statement on Form S-3 (File No. 33-65274). 10(a). Pension Plan as amended and in effect on January 1, 1991. Incorporated by reference to Exhibit (10)a to registrant's Form 10-Q for the quarter ended March 31, 1993. 10(b). Pension Equalization Plan as amended as of August 18, 1987. Incorporated by reference to Exhibit (10)b to registrant's Form 10-K for the year ended December 31, 1987. 10(c). Annual Incentive Compensation Plan. Incorporated by reference to Exhibit (10)c to registrant's Form 10-K for the year ended December 31, 1992. 10(d). 1982 Key Employees Stock Option Plan. Incorporated by reference to Exhibit to registrant's Registration Statement on Form S-8 (No. 33-10141). 10(e). 1987 Key Employees Stock Option Plan as amended as of October 25, 1993. 10(f). Agreement dated as of December 7, 1990 among registrant, SP Gold Holdings Inc., Holdgold, Inc., Hornwood Investments N.V., James M. Goldsmith, Jacob Rothschild, St. James Place Capital, plc and RIT Capital Partners plc. Incorporated by reference to Exhibit (28)(i) to registrant's Current Report on Form 8-K dated December 7, 1990. 10(g). Amendment dated May 10, 1993 to the Agreement dated as of December 7, 1990 among registrant, SP Gold Holdings Inc., Holdgold Inc., Hornwood Investments N.V., James M. Goldsmith, Jacob Rothschild, St. James Place Capital, plc and RIT Capital Partners plc. Incorporated by reference to Exhibit 28(b) to registrant's Registration Statement on Form S-3 (File No. 33-65274). 10(h). Agreement dated as of May 10, 1993 among registrant, George Soros, Soros Fund Management, Stanley F. Druckenmiller, Duquesne Capital Management, Inc., Quantum Fund N.V., Quasar International Partners C.V. and Quota Fund N.V. Incorporated by reference to Exhibit 28(c) to registrant's Registration Statement on Form S-3 (File No. 33-65274). 10(i). Severance Pay Plan as amended and restated effective May 1, 1993. Incorporated by reference to Exhibit (10)b to registrant's Form 10-Q for the quarter ended March 31, 1993. 10(j). Executive Insurance Benefit Plan. Incorporated by reference to Exhibit (10)m to registrant's Form 10-K for the year ended December 31, 1987. 10(k). Form of Agreement dated as of January 3, 1990 entered into between registrant and its executive officers and those of NGC named therein. Incorporated by reference to Exhibit (10)l to registrant's Form 10-K for the year ended December 31, 1989.
67 10(l). Agreement dated as of August 24, 1987, as amended effective October 26, 1988, between registrant and T. Peter Philip. Incorporated by reference to Exhibit (10)p to registrant's Form 10-K for the year ended December 31, 1988. 10(m). Amendment dated January 7, 1991 to Agreement dated as of August 24, 1987, as amended, between registrant and T. Peter Philip. Incorporated by reference to Exhibit (10)q to registrant's Form 10-K for the year ended December 31, 1990. 10(n). Management Services Agreement dated as of January 1, 1989 between registrant and NGC. Incorporated by reference to registrant's Exhibit 28(a) to Current Report on Form 8-K dated November 20, 1989. 10(o). Directors' Stock Award Plan. Incorporated by reference to Exhibit (10)o to registrant's Form 10-K for the year ended December 31, 1992. 10(p). 1992 Key Employees Stock Plan as amended as of October 25, 1993. 10(q). Agreement dated October 15, 1993, effective November 1, 1993, of registrant, NGC and Ronald C. Cambre. Incorporated by reference to Exhibit (10) to registrant's Form 10-Q for the quarter ended September 30, 1993. 10(r). Letter Agreement dated December 15, 1993, between NGC and registrant. Incorporated by reference to Exhibit A to NGC's Proxy Statement dated February 16, 1994. 10(s). Consultation Agreement dated as of October 31, 1993 between registrant, NGC and Gordon R. Parker. 10(t). Amendment dated December 15, 1993 to the Pension Plan as amended and in effect on January 1, 1991. 11. Statement re Computation of Per Share Earnings. 12. Statement re Computation of Ratio of Earnings to Fixed Charges. 21. Subsidiaries of registrant. 23. Consent of Independent Public Accountants. 24. Power of Attorney.
EX-3.(B) 2 BY-LAWS 1 EXHIBIT 3(b) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NEWMONT MINING CORPORATION ------------------ BY-LAWS ------------------ AS AMENDED THROUGH NOVEMBER 1, 1993 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 NEWMONT MINING CORPORATION ------------------ BY-LAWS ------------------ ARTICLE I STOCKHOLDERS SECTION 1. Annual Meeting. An annual meeting of the stockholders of the Corporation shall be held in each year at such place, and on such date and at such time, as the Board of Directors of the Corporation shall designate in a resolution duly adopted by it, for the purpose of electing Directors and transacting such other business as may properly be brought before the meeting. SECTION 2. Special Meetings. Special Meetings of the stockholders for any lawful purposes may be called by the Board of Directors or by the Chairman of the Board or by the President, and shall be called by the Chairman of the Board or by the President or the Secretary upon a written request stating the purposes thereof and signed by a majority of the Board of Directors. Each such meeting shall be held at such place, and on such date and at such time, as the Board of Directors of the Corporation shall designate in a resolution duly adopted by it, for the purposes stated in the notices thereof. Business transacted at any special meeting shall be limited to the purposes stated in the notices of the meeting. SECTION 3. Notices and Waivers. Written notices of every meeting of the stockholders, stating the time, place and purposes thereof, shall be given personally or by mail, not less than ten days nor more than sixty days before the date on which the meeting is to be held, to each stockholder of record entitled to vote at such meeting. If mailed, the notice shall be sent to the stockholders at their respective addresses appearing on the stock records of the Corporation or to such other addresses as they may have respectively designated in writing, and shall be deemed given when mailed. A waiver of any notice, signed by a stockholder before or after the time for the meeting, shall be deemed equivalent to such notice. 3 2 SECTION 4. Stockholder List. For every meeting of the stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order and showing the address of and the number of shares registered in the name of each such stockholder, shall be made and be open to the examination of any stockholder during ordinary business hours for at least ten days prior to the meeting at the place where the meeting is to be held, and shall be produced at the meeting and be subject at all times during the meeting to the inspection of any stockholder present. SECTION 5. Quorum. Subject to the provisions of any applicable law or of the Corporation's Certificate of Incorporation in respect of the vote that shall be required for a specified action, the holders of record of a majority of the capital stock of the Corporation issued and outstanding and entitled to vote at any meeting of its stockholders shall be required to be present in person or represented by proxy at such meeting in order to constitute a quorum for the transaction of any business. SECTION 6. Adjournment. If at any meeting of the stockholders there is no quorum, the meeting may be adjourned from time to time by a majority vote of the stockholders present or represented, without any notice other than by announcement at the meeting, until a quorum be obtained. Any meeting at which there is a quorum may also be adjourned, in like manner, for such time or upon such call as may be determined by vote. An adjourned meeting at which a quorum is present or represented may transact any business which might have been transacted at the meeting as first convened had there been a quorum. SECTION 7. Chairman and Secretary. At every meeting of the stockholders the presiding officer shall be the Chairman of the Board, or in his absence the Vice Chairman of the Board, or in their absence the President, and in his absence a Vice President of the Corporation. The Secretary or in his absence an Assistant Secretary of the Corporation shall act as secretary of the meeting, or in their absence the presiding officer may appoint any person present to act as secretary of the meeting. SECTION 8. Voting. Except as otherwise specifically provided herein or in the Restated Certificate of Incorporation of the Corporation with respect to the ability of certain stockholders to cumulate votes in the election of directors, each stockholder present in person or by proxy at a meeting of the stockholders shall be entitled to one vote for each share of the capital stock of the Corporation registered in the name of such stockholder on the books of the Corporation and entitled to vote at such meeting. No proxy shall be voted on after three years from its date unless it 4 3 provides for a longer period. If the Board of Directors has not closed the stock transfer books or fixed a record date for determination of stockholders entitled to vote, no share of stock shall be voted on at any election of Directors which has been transferred on the books of the Corporation within twenty days next preceding such election. If the Board of Directors has closed the stock transfer books or fixed a record date for determining the stockholders entitled to vote at a meeting, only stockholders of record at the close of business on such closing or record date shall be entitled to vote at such meeting and at any adjournment thereof. All elections of Directors shall be by a plurality vote by ballot. All other matters shall be decided by a majority vote viva voce of the stockholders present in person or by proxy except as otherwise specifically provided by any applicable law, the Corporation's certificate of Incorporation or these By-Laws; provided, however, that the presiding officer shall have the right to determine whether a stock vote with respect to any matter shall be taken by ballot. On votes taken by ballot, each ballot shall state the name of the stockholder or proxy voting and the number of shares voted. SECTION 9. Inspectors of Elections. For all elections of Directors by the stockholders and for any other matters upon which a stock vote by ballot is to be taken, the Chairman of the meeting shall appoint two inspectors of election unless the Board of Directors, which shall have power to do so, shall have previously appointed two or more inspectors for the purpose and such inspectors are present and serve as such at the meeting. Each inspector shall be sworn to perform faithfully his duties as such, and the inspectors thereupon shall take charge of the polls, receive and count the ballots and certify the result of the vote taken. Questions as to the qualifications of the voters, validity of proxies or ballots, or otherwise pertaining to the vote, shall be decided by the inspectors subject to any ruling by the Chairman. No candidate for election as a Director shall be appointed an inspector of such an election. SECTION 10. Inspection of Books and Records. The Board of Directors shall determine whether and to what extent, and at what times and places and under what conditions and regulations, the books, accounts and records of the Corporation (other than the stock ledger), or any of them, shall be open to the inspection of any stockholder. No Stockholder shall have the right to inspect any books, accounts, records or documents of the Corporation unless expressly so authorized by the laws of the State of Delaware or by these By-Laws or by a resolution of the Board of Directors. The stock ledger shall be the only evidence as to the stockholders entitled to examine the stockholder list referred to in Section 4 of Article I hereof, and the original or a duplicate stock ledger containing the names and addresses 5 4 of the stockholders and the number of shares held by them respectively shall be open at all times during usual business hours at the Corporation's principal office in the State of Delaware to the examination of any stockholder. SECTION 11. Action by Written Consent. Any action which is required to be or may be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, without prior notice to stockholders and without a vote if consents in writing, setting forth the action so taken, shall have been signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or to take such action at a meeting at which all shares entitled to vote thereon were present and voted. ARTICLE II DIRECTORS SECTION 1. Number, Term and Qualification. The number of Directors which shall constitute the whole Board shall be not less than eight nor more than fifteen. Within these specified limits, the number of Directors shall be determined from time to time by the affirmative vote of a majority of the Directors then in office. Directors elected at an annual meeting of the stockholders or elected at any other time by the stockholders or by the Board of Directors as hereinafter provided, shall hold office until the next annual meeting of the stockholders and until their respective successors are elected and qualified. Directors need not be stockholders. SECTION 2. Resignations; Vacancies. Any Director may resign at any time upon written notice to the Corporation. A resignation shall become effective when and as specified in the notice, or, in the absence of such specification, upon its acceptance by the Corporation. Vacancies occurring on the Board of Directors for any reason, and newly created directorships resulting from any increase in the number of Directors, may be filled by the affirmative vote of a majority of the Directors then in office, though less than a quorum. SECTION 3. Meetings and Notices. Meetings of the Board of Directors of the Corporation, regular or special, may be held either within or without the State of Delaware. Regular meetings of the Board may be held without notice at such time and place as the Board from time to time may by resolution determine. Special meetings of the Board, being all meetings other than its regular meetings, may be called by the Chairman, the Vice 6 5 Chairman or the President, and shall be called by the Secretary upon the written request of any two Directors. At least one day's prior written notice of the time, place and purposes of every special meeting shall be given to each Director; provided, however, that no notice of any such meeting need be given to any Director who attends the meeting or signs before or after the meeting a written waiver of notice thereof. Notices may be delivered personally or sent by mail or telegraph, and shall be deemed given when so delivered or sent. SECTION 4. Quorum. At all meetings of the Board of Directors six Directors shall constitute a quorum for the transaction of business, and the acts of a majority of the Directors present at any meeting at which a quorum is present shall be the acts of the Board, except as may be otherwise specifically provided by any applicable law or by the Corporation's Certificate of Incorporation or by these By-Laws. If a quorum is not present at any meeting, a majority of the Directors present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is obtained. SECTION 5. Order of Business. The order of business at meetings of the Board of Directors shall be as the Board may determine from time to time, or, subject to any such action by the Board, as determined by the Chairman of the meeting. SECTION 6. Powers. The Board of Directors shall manage and control the business, property and affairs of the Corporation, and shall have and may exercise all the powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws directed or required to be exercised or done by the stockholders. SECTION 7. Compensation. The Directors may be paid as compensation for their services a periodic fee, or a fixed fee for attendance at each meeting of the Board of Directors, or both, and may be paid their expenses, if any, of attendance at Board meetings, as the Board from time to time may determine, but otherwise shall not be entitled to any fees or compensation for their services as Directors. No such payment shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. SECTION 8. Interests in Contract. No contract or other transaction entered into by the Corporation shall be invalidated or affected by the fact that any Director of the Corporation is a party thereto or is otherwise interested therein, provided that such contract or transaction is authorized, 7 6 approved or ratified by the Board of Directors at a meeting at which there is a quorum present without counting such interested Director and at which any such interest of any Director is disclosed to the Board prior to its taking such action, and that such action is taken by the affirmative vote of a majority of the Directors present at such meeting without counting the vote or presence of any such interested Director. No such interested Director shall be liable or accountable to the Corporation or to any stockholder or creditor thereof or to any other person for any loss incurred by the Corporation, or for any gains or profits realized by such Director, under or by reason of any such contract or transaction so authorized, approved or ratified by the Board. ARTICLE III EXECUTIVE COMMITTEE SECTION 1. Appointment, Number and Quorum. The Board of Directors, by the affirmative vote of a majority of the whole Board, may appoint an Executive Committee consisting of such number of the directors not less than three as the Board may determine; provided, always, that the Chief Executive Officer shall at all times be appointed to the Committee. By similar action the Board may fill any vacancy in, change the membership of, or dissolve the Committee at any time in its discretion. At all meetings of the Committee a majority, but not less than three, of its members shall constitute a quorum for the transaction of business, and the affirmative vote of a majority of the whole Committee, but in no case less than three members, shall be necessary to adopt any resolution or to take any other action. Any member of the Committee who ceases to be a Director shall cease ipso facto to be a member of the Committee. Any member may resign at any time upon written notice to the Corporation. A resignation shall become effective when and as specified in the notice, or, in the absence of such specification, upon its acceptance by the Corporation. SECTION 2. Powers and Proceedings. The Executive Committee during the intervals between the meetings of the Board of Directors, shall have and may exercise, insofar as permitted by law, all the powers of the Board of Directors, provided that the Committee shall not act to fill a vacancy on the Committee and shall not take any action contrary to any specific action or direction of the Board. 8 7 The Board of Directors may designate the Chairman of the Committee and prescribe rules governing its proceedings. The Committee may elect its own Chairman from its members, if he has not been designated by the Board, and may make its own rules of procedure insofar as they do not conflict with any rules prescribed by the Board or with these By-Laws. Minutes of all acts and proceedings of the Committee shall be kept in a proper record book and shall be laid before the Directors at their next meeting. SECTION 3. Compensation. The members of the Executive Committee may be paid such compensation for their services, and such expenses incurred by them in connection therewith, as the Board of Directors may determine, but otherwise shall not be entitled to any compensation for their services as such Committee members. ARTICLE IV OFFICERS SECTION 1. Officers, Election, Term and Vacancies. At its first meeting held after each annual meeting of the stockholders, the Board of Directors shall elect, as the officers of the Corporation to serve until their successors are elected and qualify, a Chairman of the Board, a Vice Chairman of the Board, a President, one or more Vice Presidents, (one or more of whom may be designated Executive Vice Presidents or Senior Vice Presidents by the Board), a Secretary, a Treasurer, and a Controller, and may elect or appoint such Assistant Secretaries, Assistant Treasurers, Assistant Controllers and other officers as the Board in its discretion may determine. If any such officers are not elected or appointed at such first meeting, they may be elected or appointed at any subsequent meeting of the Directors. The Chairman of the Board, the Vice Chairman of the Board and the President shall be Directors, but no other officer need be a Director. Subject to the provisions of any applicable law, one person may hold two or more offices. Any officer may resign at any time upon written notice to the Corporation. A resignation shall become effective when and as specified in the notice, or, in the absence of such specification, upon its acceptance by the Corporation. Any officer may be removed at any time, with or without cause, by the affirmative vote of a majority of the whole Board of Directors. 9 8 Any vacancy occurring in any office for any reason may be filled by the Board of Directors. SECTION 2. Chairman of the Board. The Chairman of the Board shall preside at meetings of the Directors and at meetings of the stockholders. He shall have such other powers and duties as may be prescribed by the Board of Directors. SECTION 3. Chief Executive Officer. The Chairman of the Board or the Vice Chairman of the Board shall be designated by the Board of Directors to be the Chief Executive Officer of the Corporation. Such designee shall have and be responsible for the general management and control of all its business and affairs, subject only to the Board of Directors and the Executive Committee. Subject to the control of the Board of Directors, the Chief Executive Officer shall have power to employ, appoint and discharge employees and agents of the Corporation and fix their compensation, to make and sign contracts and agreements in the name and on behalf of the Corporation, to sign certificates of stock of the Corporation, to sign proxies for or to attend and vote at meetings of stockholders of any other corporation in which the Corporation holds stock, and to sign in the name and on behalf of the Corporation other instruments and documents to be executed by it. He shall see that all books, records, reports, statements and certificates are properly made, kept and filed as required of the Corporation by any applicable law, and shall have such other powers and duties as may be prescribed by the Board of Directors. SECTION 4. Vice Chairman of the Board. The Vice Chairman of the Board shall, in the absence of the Chairman, preside at meetings of the Directors and at meetings of the stockholders. The Vice Chairman shall have such other duties as may be delegated to him by the Chairman of the Board or as may be prescribed by the Board of Directors. In case of the disability of the Chairman of the Board, the Vice Chairman of the Board shall have and exercise the powers and duties of the Chairman of the Board. The Vice Chairman of the Board, if not designated to be the Chief Executive Officer, shall have such other powers and duties as may be delegated to him by the Chairman of the Board or as may be prescribed by the Board of Directors. SECTION 5. President. The President shall be the chief operating officer of the Corporation, and shall be responsible for the operation of its business and affairs, subject to the direction of the Chairman of the Board, 10 9 the Vice Chairman of the Board and of the Board of Directors and the Executive Committee. SECTION 6. Vice Presidents. Each Vice President, Executive Vice President (if any) and Senior Vice President (if any) shall have such powers and duties as may be delegated to him by the Chief Executive Officer or as may be prescribed by the Board of Directors. SECTION 7. Secretary. The Secretary shall attend all meetings of the stockholders, Board of Directors and Executive Committee, and shall record all the proceedings and votes taken at such meetings in appropriate books kept by him for that purpose. He shall give, or cause to be given, all notices required by law or by these By-Laws to be given of all such meetings, and shall see that the list of stockholders required for every meeting of the stockholders is properly prepared and made and kept at the place of the meeting for at least ten days prior thereto. The Secretary shall keep or cause to be kept in safe custody the seal of the Corporation, its unissued stock certificates, stock transfer books, stock ledgers, and such other books, records, documents and papers of the Corporation as the Board of Directors may direct; provided, however, that the Transfer Agent, if one be appointed, shall have custody of the unissued stock certificates, stock transfer books and stock ledgers. The Secretary shall have power to countersign or attest all contracts, agreements, stock certificates, proxies and other instruments and documents signed on behalf of the Corporation by the Chairman of the Board, the President or a Vice President, and to affix thereto the seal of the Corporation, and to certify all minutes and extracts from minutes of meetings of the stockholders, Board of Directors and Executive Committee, and all resolutions passed or adopted thereat. He shall have such other powers and shall perform such other duties as may be prescribed by the Board of Directors, and, subject to the control of the Board, all such powers and duties as are generally incident to his office of Secretary. SECTION 8. Assistant Secretaries. Each Assistant Secretary shall have all the powers and may perform all the duties of the Secretary in the absence or disability of the Secretary unless the Board of Directors shall otherwise determine, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors. SECTION 9. Treasurer. The Treasurer shall receive and have in his charge or custody the funds, securities and valuable effects of the Corpora- 11 10 tion, and shall deposit or keep same to the credit or in the name of the Corporation in such banks or depositories as the Board of Directors designates. He shall disburse the funds of the Corporation and dispose of its securities and valuable effects in his charge only as he may be authorized or directed by the Board of Directors or by an officer, committee or agent acting with and under the authority of the Board. He shall take and preserve proper vouchers or receipts for all disbursements. The Treasurer shall keep full, accurate and current accounts of all receipts and disbursements of funds, the acquisition and disposition of all securities and valuable effects, and all other financial transactions of the Corporation, in appropriate books kept by him for such purposes. He shall render such reports, accounts and statements of the Corporation's financial transactions and condition to the stockholders, Board of Directors, Executive Committee and the Chief Executive Officer as may be required or requested, and shall exhibit his books of account and records to the Chairman of the Board, the Vice Chairman of the Board, the President, a Vice President, the Controller, or any Director upon request at the Corporation's office where such books or records are kept. The Treasurer shall have power on behalf of the Corporation to endorse for collection, bills, notes, drafts, checks and other instruments for payment of funds to the Corporation, and to sign receipts and vouchers for payments made to the Corporation. He shall sign or countersign all bills, notes, drafts, checks and other instruments for payments made by the Corporation, and all assignments or powers for transfers of securities and other valuable effects of the Corporation, and certificates of the stock of the Corporation provided, however, that the Board of Directors may authorize or require other officers or agents of the Corporation to sign or countersign in its name any such papers, instruments or documents. He shall have such other powers and shall perform such other duties as may be prescribed by the Board of Directors, and, subject to the control of the Board, such powers and duties as are generally incident to his office of Treasurer. If required by the Board of Directors, the Treasurer shall give a bond or bonds in such sums and with such sureties as the Board may approve, for the faithful performance of his duties and for the restoration to the Corporation, in case of his death, resignation, retirement or removal from office, of all books, records, papers, money and property of whatever kind in his possession or under his control and belonging to the Corporation. 12 11 SECTION 10. Assistant Treasurers. Each Assistant Treasurer shall have all the powers and may perform all the duties of the Treasurer in case of the disability of the Treasurer unless the Board of Directors shall otherwise determine, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors. He shall give a like bond or bonds, if any, as are given by the Treasurer. SECTION 11. Controller. The Controller shall have direct responsibility for and supervision of the accounting records of the Corporation and of its subsidiaries and managed affiliated corporations, and shall see that adequate examination and audits thereof are currently and regularly made. He shall prepare and file all tax returns, and shall prepare statements of operating and production costs, cash forecasts and any other financial reports of the Corporation. He shall ascertain that the property of the Corporation is kept at all times properly and adequately insured, and shall have custody of any bonds given by the Treasurer or any Assistant Treasurer as above mentioned. He shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or be assigned to him by the Chairman of the Board. SECTION 12. Assistant Controllers. Each Assistant Controller shall have all the powers and may perform all of the duties of the Controller in case of the disability of the Controller unless the Board of Directors shall otherwise determine, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors. SECTION 13. Other Officers. Each other officer elected or appointed by the Board of Directors shall have such powers and perform such duties as may be prescribed by the Board, and, subject to the control of the Board, such powers and duties as are generally incident to his office. ARTICLE V CAPITAL STOCK SECTION 1. Stock Certificates. Certificates for shares of the capital stock of the Corporation shall be in such form, not inconsistent with any applicable law or the Corporation's Certificate of Incorporation, as shall be prescribed or approved from time to time by the Board of Directors. Holders of the stock shall be entitled to have such certificates issued in the name of the Corporation, under its seal and signed by the Chairman of the Board, the Vice Chairman of the Board, the President or a Vice President and by the Secretary or Treasurer or an Assistant Secretary or Assistant 13 12 Treasurer, evidencing and certifying the number of shares owned by such respective stockholders in the Corporation. Such certificates may be so sealed and signed either manually or by facsimile seal or signatures, if and as permitted by law and authorized or approved by the Board of Directors. If any officer whose signature is used on any certificate shall cease to be such officer for any reason before the issuance or delivery of the certificate by the Corporation, the validity of the Certificate upon its issuance and delivery shall not be thereby affected. The Board of Directors may authorize and require the signing of any certificate or certificates by a Transfer Agent and a Registrar, in addition to the signing by the officers of the Corporation. SECTION 2. Stock Transfers. The shares of stock of the Corporation shall be transferred only on the books of the Corporation by the holders thereof in person or by their duly authorized attorney, upon surrender for cancellation of the certificates for the shares to be transferred, with a duly executed assignment or stock power endorsed thereon or attached thereto, and accompanied by such other evidences of transfer or authority, such guarantees of signatures and such payments of stock transfer taxes or other charges as may be reasonably required. The Board of Directors may appoint a Transfer Agent and a Registrar for the capital stock of the Corporation. SECTION 3. Lost Certificates. Unless otherwise determined by the Board of Directors, a new certificate shall be issued in place of any certificate theretofore issued by the Corporation for its capital stock and alleged by the holder thereof to have been lost, stolen or destroyed; provided, however, that the applicant for any such new certificate shall furnish to the Corporation evidence satisfactory to it of the alleged loss, theft or destruction, together with such bond or indemnification as the Board of Directors from time to time may require to indemnify the Corporation against any claim that may be made against it or its officers or agents on account of a certificate alleged to have been lost, stolen or destroyed or the issuance of a new certificate replacing it. SECTION 4. Closing Transfer Books or Fixing Record Date. The Board of Directors may close the stock transfer books of the Corporation for a period not exceeding sixty days preceding the date of any meeting of stockholders or the date for payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect, or for a period of not exceeding sixty 14 13 days in connection with obtaining the consent of stockholders for any purpose. In lieu of closing the stock transfer books as aforesaid, the Board of Directors may fix in advance a date, not exceeding sixty days preceding the date of any meeting of stockholders or the date for the payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect, or may fix a date in connection with obtaining any consent of stockholders, as a record date for the determination of the stockholders entitled to notice of and to vote at any such meeting and any adjournment thereof, or to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, or to give such consent. Only such stockholders as shall be stockholders of record at the close of business on the date of such closing of the stock transfer books or on such record date shall be entitled to notice of and to vote at such meeting and any adjournment thereof, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, or to give such consent, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any such closing or record date. SECTION 5. Registered Stockholders. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware. SECTION 6. Stock Ledger. The original or a duplicate stock ledger shall be kept at the Corporation's principal office in the State of Delaware. ARTICLE VI INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS SECTION 1. Indemnification of Directors and Officers. The Corporation shall, to the fullest extent permitted by applicable law, indemnify any person (and the heirs, executors and administrators thereof) who was or is made, or threatened to be made, a party to an action, suit or proceeding, (whether civil, criminal, administrative or investigative, whether involving any actual or alleged breach of duty, neglect or error, any accountability, or any actual or alleged misstatement, misleading statement or other act or omission and whether brought or threatened in any court or administrative 15 14 or legislative body or agency,) including (i) an action by or in the right of the Corporation to procure a judgment in its favor and (ii) an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, which any director or officer of the Corporation is serving or served in any capacity at the request of the Corporation, by reason of the fact that he, his testator or intestate is or was a director or officer of the Corporation, or is serving or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid in settlement, and costs, charges and expenses, including attorneys' fees, incurred therein or in any appeal thereof. SECTION 2. Indemnification of Others. The Corporation shall indemnify other persons and reimburse the expenses thereof, to the extent required by applicable law, and may indemnify any other person to whom the Corporation is permitted to provide indemnification or the advancement of expenses, whether pursuant to rights granted pursuant to, or provided by, the Delaware General Corporation Law or otherwise. SECTION 3. Advances or Reimbursement of Expenses. The Corporation shall, from time to time, reimburse or advance to any person referred to in Section 1 the funds necessary for payment of expenses, including attorneys' fees, incurred in connection with any action, suit or proceeding referred to in Section 1, upon receipt of a written undertaking by or on behalf of such person to repay such amount(s) if a judgment or other final adjudication adverse to the director or officer establishes that (i) his acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, (ii) he personally gained in fact a financial profit or other advantage to which he was not legally entitled, or (iii) his conduct was otherwise of a character such that Delaware law would require that such amount(s) be repaid. SECTION 4. Service of Certain Entities Deemed Requested. Any director or officer of the Corporation serving (i) another corporation, of which a majority of the shares entitled to vote in the election of its directors is held by the Corporation, or (ii) any employee benefit plan of the Corporation or any corporation referred in clause (i), in any capacity shall be deemed to be doing so at the request of the Corporation. SECTION 5. Interpretation. Any person entitled to be indemnified or to the reimbursement or advancement of expenses as a matter of right 16 15 pursuant to this Article may elect to have the right to indemnification (or advancement of expenses) interpreted on the basis of the applicable law in effect at the time of the occurrence of the event or events giving rise to the action, suit or proceeding, to the extent permitted by applicable law, or on the basis of the applicable law in effect at the time indemnification is sought. SECTION 6. Indemnification Right. The right to be indemnified or to the reimbursement or advancement of expenses pursuant to this Article (i) is a contract right pursuant to which the person entitled thereto may bring suit as if the provisions hereof were set forth in a separate written contract between the Corporation and the director or officer, (ii) is intended to be retroactive and shall be available with respect to events occurring prior to the adoption hereof, and (iii) shall continue to exist after the rescission or restrictive modification hereof with respect to events occurring prior thereto. SECTION 7. Indemnification Claims. If a request to be indemnified or for the reimbursement or advancement of expenses pursuant hereto is not paid in full by the Corporation within thirty days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled also to be paid the expenses of prosecuting such claim. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of or reimbursement or advancement of expenses to the claimant is proper in the circumstances, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant is not entitled to indemnification or to the reimbursement or advancement of expenses, shall be a defense to the action or create a presumption that the claimant is not so entitled. 17 16 ARTICLE VII MISCELLANEOUS PROVISIONS SECTION 1. Fiscal Year. The fiscal year of the Corporation shall be the calendar year. SECTION 2. Offices. The principal office of the Corporation in the State of Delaware shall be maintained in the City of Wilmington, County of New Castle. The Corporation may have offices at such other places within or without the State of Delaware as the Board of Directors from time to time may determine. SECTION 3. Resident Agent. The Resident Agent of the Corporation in charge of its principal office in the State of Delaware shall be The Corporation Trust Company. SECTION 4. Seal. The seal of the Corporation shall have inscribed thereon the name of the Corporation, the year of its incorporation and the words "Corporate Seal, Delaware." SECTION 5. Dividends. Subject to all applicable laws and the Certificate of Incorporation, dividends upon the capital stock of the Corporation may be declared by the Board of Directors, payable in cash, in property or in shares of the capital stock of the Corporation. SECTION 6. Amendments. Subject to any By-Laws made by the stockholders, the Board of Directors may make By-Laws, and from time to time may alter, amend or repeal any By-Law or By-Laws; but any By-Laws made by the Board of Directors may be altered or repealed by the stockholders at any annual meeting, or at any special meeting provided notice of such proposed alteration or repeal be included in the notice of such special meeting. SECTION 7. Separability. In case any By-Law or provision in any By-Law shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining By-Laws or remaining provisions of such By-Law shall not in any way be affected or impaired thereby. EX-10.(E) 3 1987 KEY EMPLOYEES STOCK OPTION PLAN 1 EXHIBIT 10(e) AMENDED AND RESTATED 1987 KEY EMPLOYEES STOCK OPTION PLAN FOR NEWMONT MINING CORPORATION and SUBSIDIARIES (effective as of October 25, 1993) 1. PURPOSE OF PLAN The purpose of the Plan is to aid Newmont Mining Corporation ("Company") and its subsidiaries in securing and retaining key employees of outstanding ability and to motivate such employees to exert their best efforts on behalf of the Company and its subsidiaries. The Company expects that it will benefit from the added interest which the respective participants will have in the welfare of the Company as a result of their ownership or increased ownership of the Company's common stock. 2. STOCK SUBJECT TO THE PLAN The total number of shares of common stock par value $1.60 per share of the Company ("Common Stock") that may be optioned under the Plan is 1,100,000. No Participant shall be granted, in any one year, options, whether Incentive Stock Options or other than Incentive Stock Options, to purchase in the aggregate more than 320,000 shares of Common Stock. They may consist, in whole or in part, of unissued shares or treasury shares. If any shares that have been optioned cease to be subject to option, they may again be optioned under the Plan. The Board of Directors, and the proper Officers of the Company shall from time to time take the appropriate action required for the delivery of the stock, in accordance with the options and the exercises thereof. 3. ADMINISTRATION The Board of Directors of the Company shall appoint a Committee which shall administer the Plan. The Committee shall be made up of at least three members of the Board of Directors who shall not have been eligible for selection as a person to whom stock may have been allocated or to whom stock options or stock appreciation rights of the Company or any of its affiliates may have been granted pursuant to the Plan or any other plan of the Company or its affiliates at any time within one year prior to the date of appointment to the Committee. The members of the Committee shall serve at the pleasure of the Board and shall not be eligible to participate in the Plan. The Committee shall have the authority consistent with the Plan, to determine the provisions of the options to be granted, to interpret the Plan and the options granted under the Plan, to adopt, amend and 2 rescind rules and regulations for the administration of the Plan and the options, and generally to conduct and administer the Plan and to make all determinations in connection therewith which may be necessary or advisable, and all such actions of the Committee shall be binding upon all participants. 4. ELIGIBILITY Key employees, including officers, of the Company and its subsidiaries (but excluding members of the Committee and any person who serves only as a director), are eligible to be granted options under the Plan. The participants in the Plan shall be selected from time to time by the Committee, in its sole discretion, from among those eligible, and the Committee shall determine in its sole discretion the number of shares to be covered by the option or options granted to each participant. 5. LIMITATIONS No option may be granted under the Plan after May 5, 1997 but options theretofore granted may by their terms extend and be exercisable beyond that date. 6. TERMS AND CONDITIONS OF OPTIONS All options granted under the Plan shall be either Incentive Stock Options as defined in Section 422A of the Internal Revenue Code of 1986 as amended (the "Code") or options other than Incentive Stock Options. Each such option shall be subject to the foregoing paragraphs hereof, and to the following terms and conditions, and to such other terms and conditions not inconsistent therewith as the Committee shall determine and set forth in the option documents delivered to the participants. (a) The option exercise price per share shall be determined by the Committee, but shall not be less than 100% of the fair market value per share on the date that the option is granted, determined as provided in paragraph (h) below. (b) Each option shall be exercisable at such times and under such conditions as are set forth in the option. No option shall be exercisable after the expiration of 10 years and one day from the date the option is granted. (c) No option shall be exercised for less than the lesser of 50 shares or the full number of shares for which the option is then exercisable. To the extent options are exercisable they may be exercised from time to time by notice to the Company, in such form as the Committee may prescribe or approve. In addition to the option exercise price in respect of each exercise of the option, the - 2 - 3 optionee shall pay to the Company (or agree to pay to the Company at such time as the Company may specify) any amounts which the Company in its absolute discretion determines it is obligated to withhold as Federal, state or local taxes upon or in connection with such exercise of the option. (d) Each option granted hereunder which is intended to be an Incentive Stock Option shall be so designated. (e) Payments for shares purchased on each exercise of an option shall be made (i) in cash, or (ii) shares of Common Stock, or (iii) by a combination of cash and shares of Common Stock, or (iv) if the option shall so provide, by delivery of a promissory note satisfying the terms and conditions set forth in the option or (v) in such other manner specified by the Committee. The Committee may, from time to time, impose limits and conditions on the use of Common Stock for payment or on any other form of payment. (f) Notwithstanding the foregoing paragraph (e), any option granted under the Plan may provide the right to exercise such option in whole or in part without any payment of the option price. If an option is exercised without a payment of the option price, the optionee shall be entitled to receive a payment equal to the excess of the fair market value, determined as provided in paragraph (h) below, of the shares covered by the option over the total option price of such shares. Such payment shall be in whole shares of Common Stock, in cash or partly in such shares and partly in cash solely as determined by the Committee. The number of shares with respect to which any option is exercised under this paragraph (f) shall reduce the number of shares thereafter available for exercise under the option and such shares may not again be optioned under the Plan. (g) In addition to termination upon exercise and termination upon the expiration of the stated term of options each option shall terminate at such time after the termination of a participant's employment as shall be set forth in the option. The option may provide for different termination dates or other related provisions for the option depending upon the cause of termination of employment. (h) The fair market value of shares of Common Stock shall be the average of the composite high and low prices at which the Company's common stock was traded on the relevant date as reported for New York Stock Exchange issues in The Wall Street Journal unless the Committee shall determine that some other method of valuation permitted by Section 422A of the Code shall be used. - 3 - 4 (i) In no event shall any participant be granted an Incentive Stock Option under the Plan if such grant would permit the participant to exercise for the first time during any calendar year (under the Plan and all other plans of the Company, its parent and subsidiary corporations) Incentive Stock Options to purchase shares of any or all such corporations having an aggregate fair market value (determined at time of grant of each such Incentive Stock Option) in excess of $100,000. (j) The Committee may require each person purchasing shares pursuant to the option to represent to and agree with the Company in writing that he is acquiring the shares for investment and not with a view to the distribution thereof. (k) The option shall not be transferable by the participant otherwise than by will or by the laws of descent and distribution. During the lifetime of a participant the option shall be exercisable only by him. 7. TRANSFER, LEAVE OF ABSENCE, ETC. For the purposes of the Plan, the following shall not be deemed a termination of employment: (a) The transfer of a participant from the Company to a subsidiary or vice versa, or from one subsidiary to another; (b) A leave of absence, duly authorized in writing by the Company, when the leave does not exceed 90 days; (c) A leave of absence, duly authorized by the Company, exceeding 90 days where the participant's right to reemployment is guaranteed either by statue or by contract. 8. CHANGES IN CAPITAL A. Upon changes in the Common Stock by a stock dividend, stock split, reverse split, recapitalization, merger, consolidation, (whether or not the Company is the surviving corporation) combination or exchange of shares, separation, reorganization or liquidation, the number and class of shares available under the Plan as to which stock options may be granted, the number and class of shares under each option and the option price per share shall be correspondingly adjusted by the Committee, such adjustments to be made in the case of outstanding options without change in the total price applicable to such option. B. Except as otherwise specifically provided in the stock option, in the event of a merger, consolidation, combination, - 4 - 5 reorganization or other transaction in which the shareowners of the Company will receive cash or securities (other than stock of the Company) or in the event that an offer is made to the holders of Common Stock to sell or exchange such Common Stock for cash, securities or stock of another corporation and such offer, if accepted, would result in the offeror becoming the owner of (a) at least 50% of the outstanding Common Stock of the Company or (b) such lesser percentage of the outstanding Common Stock which the Committee in its sole discretion determines may materially adversely affect the market value of the Common Stock after the tender offer, the Committee shall, prior to the shareowners' vote on such transaction or prior to the expiration date (without extensions) of the tender or exchange offer, (i) accelerate the time of exercise so that all stock options which are outstanding shall become immediately exercisable in full without regard to any limitations of time or amount otherwise contained in the Plan or the options and/or (ii) determine that the options shall be adjusted and make such adjustments by substituting for Common Stock subject to options, stock or other securities of the surviving corporation or offeror if such stock or other securities of such corporation are publicly traded or, if such stock or other securities are not publicly traded, by substituting stock or other securities of a parent or affiliate of the surviving corporation or offeror if the stock or other securities of such parent or affiliate are publicly traded, in which event the aggregate option price shall remain the same and the amount of shares or other securities subject to option shall be the amount of shares or other securities which could have been purchased on the closing day of such transaction or the expiration date of the offer with the proceeds which would have been received by the optionee if the option had been exercised in full prior to such transaction or expiration date and the optionee had exchanged all of such shares in the transaction or sold or exchanged all of such shares pursuant to the tender or exchange offer. No optionee shall have any right to prevent the consummation of any of the foregoing acts affecting the number of shares available to the optionee. 9. USE OF PROCEEDS Proceeds from the sales of stock pursuant to exercises of options granted under the Plan shall constitute general funds of the Company. 10. AMENDMENTS The Board of Directors may amend, alter, or discontinue the Plan, but no amendment, alteration or discontinuation shall be made which would impair the rights of any participant under any option outstanding at the time without such participant's consent, or which, without the approval of the Company's stockholders, would: - 5 - 6 (a) except as provided in Paragraph 8 of the Plan, increase the total number of shares reserved of the purpose of the Plan; or (b) except as provided in Paragraph 8 of the Plan, decrease the option price to less than 100% of the fair market value on the date of the granting of the option; or (c) change the description of employees (or class of employees) eligible to receive options under the Plan. The Committee may amend the terms of any outstanding option, prospectively or retroactively, but no such amendment shall impair the rights of any person holding such option without his written consent. The Committee may also substitute new stock options for previously granted options, including previously granted options having higher option prices. - 6 - EX-10.(P) 4 1992 KEY EMPLOYEES STOCK OPTION PLAN 1 EXHIBIT 10(p) NEWMONT MINING CORPORATION AMENDED AND RESTATED 1992 KEY EMPLOYEES STOCK PLAN (Effective as of October 25, 1993) 1. Purpose The purpose of the 1992 Key Employees Stock Plan ("Plan") is to aid Newmont Mining Corporation ("Company") and its subsidiaries in securing and retaining key employees of outstanding ability and to motivate such employees to exert their best efforts on behalf of the Company and its subsidiaries. The Company expects that it will benefit from the added interest which the respective participants will have in the welfare of the Company as a result of their ownership or increased ownership of the Company's common stock. 2. Stock Subject to the Plan The total number of shares of the Company's common stock that may be optioned or awarded under the Plan is 2,000,000 of which no more than 400,000 may be awarded as restricted stock. No participant shall be granted, in any one year, options, whether ISOs or other than ISOs, to purchase in the aggregate more than 320,000 shares of Common Stock. Such shares may consist, in whole or in part, of unissued shares or treasury shares. If any shares that have been optioned cease to be subject to option, they may again be optioned under the Plan. Any shares of restricted stock which are forfeited may again be awarded under the Plan. 3. Administration The Company's Board of Directors shall appoint a Committee of at least three persons which shall administer the Plan. Members of the Committee must be disinterested persons within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934. The members of the Committee shall serve at the pleasure of the Board and shall not be eligible to participate in the Plan. The Committee shall have the authority consistent with the Plan, to determine the provisions of the options and restricted stock awards to be granted and the timing thereof, to interpret the Plan, the options and the restricted stock awards granted under the Plan, to adopt, amend and rescind rules and regulations for the administration of the Plan, the options, and the restricted stock awards, and generally to conduct and administer the Plan and to make all determinations in connection therewith which may be necessary or advisable, and all such actions of the Committee shall be binding upon all participants. 4. Eligibility Key employees, including officers, of the Company and its subsidiaries (but excluding members of the Committee and any person who serves only as a director) are eligible to be granted options and restricted stock awards under the Plan. The participants in the Plan shall be selected from time to time by the Committee, in its sole discretion, from among those eligible, and the Committee shall determine in its sole discretion the number of shares to be covered by the restricted stock awards or options granted to each participant. 5. Limitations No option or restricted stock award may be granted under the Plan after May 7, 2002 but options and restricted stock awards theretofore granted may by their terms extend and be exercisable beyond that date. 1 2 6. Terms and Conditions of Options All options granted under the Plan shall be either Incentive Stock Options ("ISOs") as defined in Section 422 of the Internal Revenue Code of 1986, as amended, (the "Code") or options other than ISOs. Each such option shall be subject to the foregoing paragraphs hereof, and to the following terms and conditions, and to such other terms and conditions not inconsistent therewith as the Committee shall determine and set forth in the option documents delivered to the participants. (a) The option exercise price per share shall be determined by the Committee, but shall not be less than 100% of the fair market value per share on the date that the option is granted, determined as provided in paragraph (i) below. (b) Each option shall be exercisable at such times and under such conditions as are set forth in the option. No option shall be exercisable after the expiration of 10 years from the date the option is granted. (c) No option shall be exercised for less than the lesser of 50 shares or the full number of shares for which the option is then exercisable. To the extent options are exercisable they may be exercised from time to time by notice to the Company, in such form as the Committee may prescribe or approve. In addition to the option exercise price in respect of each exercise of the option, the optionee shall pay to the Company (or agree to pay to the Company at such time as the Company may specify) any amounts which the Company in its absolute discretion determines it is obligated to withhold as federal, state or local taxes upon or in connection with such exercise of the option. In lieu of cash payments, an optionee may elect to have his tax withholding obligations met by the withholding of shares of common stock in accordance with rules approved by the Committee. (d) Each option shall state whether it is intended to be or not to be an ISO. (e) Payments for shares purchased on each exercise of an option shall be made (i) in cash, or (ii) shares of common stock having a fair market value (as defined in paragraph (i) below) equal to the exercise price, or (iii) by a combination of cash and shares of common stock, or (iv) if the option shall so provide, by delivery of a promissory note satisfying the terms and conditions set forth in the option or (v) in such other manner specified by the Committee. The Committee may, from time to time, impose limits and conditions on the use of common stock for payment or on any other form of payment. (f) Notwithstanding the foregoing paragraph (e), any option granted under the Plan may provide the right to exercise such option in whole or in part without any payment of the option price. If an option is exercised without a payment of the option price, the optionee shall be entitled to receive a payment equal to the excess of the fair market value, determined as provided in paragraph (h) below, of the shares covered by the option over the total option price of such shares. Such payment shall be in whole shares of common stock, in cash or partly in such shares and partly in cash solely as determined by the Committee. The number of shares with respect to which any option is exercised under this paragraph (f) shall reduce the number of shares thereafter available for exercise under the option and such shares may not again be optioned under the Plan. (g) Each option may provide that the optionee may exercise the option without payment of the option price by delivery to the Company of an exercise notice and irrevocable instructions to deliver shares of common stock directly to the stockbroker named therein in exchange for payment of the option price and withholding taxes by such broker to the Company. (h) In addition to termination upon exercise and termination upon the expiration of the stated term of options each option shall terminate at such time after the termination of a participant's employment as shall be set forth in the option. The option may provide for different termination dates or other related provisions for the option depending upon the cause of termination of employment. (i) The fair market value of shares of common stock shall be the average of the high and low prices at which the Company's common stock was traded on the relevant date as reported for New York Stock Exchange issues in The Wall Street Journal unless the Committee shall determine that some other method of valuation permitted by Section 422 of the Code shall be used. 2 3 (j) Notwithstanding any intent to grant ISOs, an option granted to a participant will not be considered an ISO to the extent that it together with any ISOs previously granted to such participant permits the exercise by such participant for the first time in any calendar year of more than $100,000 in fair market value of common stock (determined at the time of grant). (k) The Committee may require each person purchasing shares pursuant to the option to represent to and agree with the Company in writing that such person is acquiring the shares for investment and not with a view to the distribution thereof. (l) Each option shall be personal and shall not be transferable by the optionee otherwise than by will or by the laws of descent and distribution; provided, however, the optionee may name a beneficiary of the option by filing a written designation with the Company. If an option is exercisable after the death of the optionee, such option may be exercised by the beneficiary most recently designated by the optionee or, if no such beneficiary survives him, by the legal representative of his estate. During the lifetime of an optionee, the option shall be exercisable only by him. 7. Terms and Conditions of Restricted Stock Awards The Committee may, from time to time, make awards not to exceed 400,000 shares of common stock to employees eligible to participate in the Plan. Each award shall be subject to the following paragraphs and to the following terms and conditions and to such other terms and conditions not inconsistent therewith as the Committee shall determine and set forth in the restricted stock award documents delivered to the participants. (a) At the time of the award, the Committee will specify vesting and earnout provisions which may be dependent on continued employment, the achievement of specified performance goals, or both. No award will vest sooner than six months from the date of grant. When the shares vest, they shall be delivered to the employee free of restrictions. (b) During the period until vesting, the employee shall have all the rights of a shareholder of the Company except that the restricted shares may not be sold, pledged, or otherwise transferred. (c) The employee shall pay to the Company (or agree to pay to the Company at such time as the Company may specify) any amounts which the Company in its absolute discretion determines it is obligated to withhold as federal, state or local taxes. In lieu of cash payments, an employee may elect to have his tax withholding obligations met by the withholding of shares of common stock in accordance with rules approved by the Committee. (d) Restricted shares subject to specified performance criteria shall be forfeited upon failure to meet such criteria to the extent set forth in the restricted stock award. Restricted shares shall vest or be forfeited after the termination of a participant's employment in accordance with the terms of such participant's restricted stock award. Restricted stock awards may provide different vesting and forfeiture provisions for different causes of termination of employment and the Committee may, in its sole discretion, waive any forfeitures for whatever reason the Committee considers to be in the interest of the Company. (e) Upon the death of a participant, his interests in any restricted shares not forfeited shall be distributable to the beneficiary most recently designated by him in a writing filed with the Company, or, if no such beneficiary survives him, to the legal representative of his estate. 8. Transfer and Leave of Absence For the purposes of the Plan, the following shall not be deemed a termination of employment: (a) The transfer of a participant from the Company to a subsidiary or vice versa, or from one subsidiary to another; (b) A leave of absence, duly authorized in writing by the Company, when the leave does not exceed 90 days; 3 4 (c) A leave of absence, duly authorized by the Company, exceeding 90 days where the participant's right to reemployment is guaranteed either by statute or by contract. 9. Changes in Capital Upon changes in the common stock by a stock dividend, stock split, reverse split, recapitalization, merger, consolidation, (whether or not the Company is the surviving corporation) combination or exchange of shares, separation, reorganization or liquidation, the number and class of shares available under the Plan as to which stock options and restricted shares may be granted, the number and class of shares under each option and the option price per share shall be correspondingly adjusted by the Committee, such adjustments to be made in the case of outstanding options without change in the total price applicable to such options. Except as otherwise specifically provided in the stock option or restricted stock award, in the event of a merger, consolidation, combination, reorganization or other transaction in which the stockholders of the Company will receive cash or securities (other than stock of the Company) or in the event that an offer is made to the holders of common stock to sell or exchange such common stock for cash, securities or stock of another corporation and such offer, if accepted, would result in the offeror becoming the owner of (a) at least 50% of the outstanding common stock of the Company or (b) such lesser percentage of the outstanding common stock which the Committee in its sole discretion determines may materially adversely affect the market value of the common stock after the tender offer, the Committee shall, prior to the shareowners' vote on such transaction or prior to the expiration date (without extensions) of the tender or exchange offer, (i) accelerate the vesting of restricted shares, (ii) accelerate the time of exercise so that all stock options which are outstanding shall become immediately exercisable in full without regard to any limitations of time or amount otherwise contained in the Plan or the options and/or (iii) determine that the options shall be adjusted and make such adjustments by substituting for common stock subject to options, stock or other securities of the surviving corporation or offeror if such stock or other securities of such corporation are publicly traded or, if such stock or other securities are not publicly traded, by substituting stock or other securities of a parent or affiliate of the surviving corporation or offeror if the stock or other securities of such parent or affiliate are publicly traded, in which event the aggregate option price shall remain the same and the amount of shares or other securities subject to option shall be the amount of shares or other securities which could have been purchased on the closing day of such transaction or the expiration date of the offer with the proceeds which would have been received by the optionee if the option had been exercised in full prior to such transaction or expiration date and the optionee had exchanged all of such shares in the transaction or sold or exchanged all of such shares pursuant to the tender or exchange offer. No optionee shall have any right to prevent the consummation of any of the foregoing acts affecting the number of shares available to the optionee. 10. Use of Proceeds Proceeds from the sales of stock pursuant to exercises of options granted under this Plan shall constitute general funds of the Company. 11. Amendments The Board of Directors may amend, alter, or discontinue the Plan, but no amendment, alteration or discontinuation shall be made which would impair the rights of any participant under any option or restricted stock award outstanding at the time without such participant's consent, or which, without the approval of the Company's stockholders, would: (a) except as provided in Paragraph 9 of the Plan, increase the total number of shares reserved for the purpose of the Plan; or (b) except as provided in Paragraph 9 of the Plan, decrease the option price to less than 100% of the fair market value on the date of the granting of the option; or 4 5 (c) change the description of employees (or class of employees) eligible to receive options under the Plan. The Committee may amend the terms of any outstanding option or restricted stock award, prospectively or retroactively, but no such amendment shall impair the rights of any person holding such option without his written consent. Notwithstanding the foregoing, the Board of Directors may amend the Plan and the Committee may amend any option or award, either retroactively or prospectively and without the consent of any optionee or award holder, so as to preserve or come within any exemptions from liability under Section 16(b) of the Securities Exchange Act of 1934 pursuant to rules and releases promulgated by the Securities and Exchange Commission. 5 EX-10.(S) 5 CONSULTATION AGREEMENT 1 EXHIBIT 10 (S) CONSULTATION AGREEMENT Gordon R. Parker AGREEMENT made as of the 31st day of October, 1993 by and among Newmont Mining Corporation, ("Mining"), Newmont Gold Company ("Gold"), each a Delaware corporation with offices at 1700 Lincoln Street, Denver, Colorado 80203 and Gordon R. Parker, residing at 13 Sunset Drive, Englewood, Colorado 80110 ("Parker"). Gold and Mining are hereinafter sometimes referred to collectively as the "Companies." W I T N E S E T H: WHEREAS, the Companies developed a management succession plan in which Parker retired as Chief Executive Officer of each of the Companies on November 1, 1993 and as an employee of Gold on November 30, 1993, and WHEREAS, the Companies are desirous of retaining Parker's services as a consultant for a period of time, and WHEREAS, Parker is willing to render consulting services, and WHEREAS, Parker is willing to forgo severance benefits to which he might otherwise have been entitled under an employment agreement, 2 NOW, THEREFORE, the parties agree as follows: 1. Retirement as an Employee. Parker has retired as an employee of Gold on November 30, 1993. All rights which Parker may have under all of the Companies' benefit plans covering their respective employees shall be determined based upon his termination of employment being effective as of November 30, 1993, and he shall continue to participate in any such plans thereafter only to the extent that they accord benefits to a retired employee. 2. Consulting Services. During December 1993 and in calendar years 1994 and 1995 Parker shall render such advisory, consulting and other services to the Boards of Directors and the Companies as the Board of Directors of each of the Companies (in consultation with its Chief Executive Officer) may reasonably request, provided, however, that Parker shall not be required to devote over the course of the year more than the equivalent of 50% of his business time to such services. Parker may engage in other business activities, provided he remains reasonably available, including availability by telephone, to perform the services required by this paragraph 2 and subject to the restrictions contained in paragraph 6. 3. Compensation. Parker shall render services to the Companies during December 1993 and all of 1994 and 1995 as an independent contractor and not as an employee. -2- 3 He shall receive compensation which shall be paid by Gold at the rate of $400,000 per annum in December 1993 and in calendar 1994 and at the rate of $300,000 per annum in calendar 1995, payable monthly in arrears. Such compensation shall be in lieu of any director's retainer or fees to which he would otherwise be entitled except for fees paid for attendance at meetings of the Boards of Directors. Parker shall not be eligible to participate in the Newmont Mining Corporation Directors' Stock Award Plan or any stock plan for its directors adopted by Gold. 4. Stock Option Vesting. The terms of all unvested non-qualified stock options awarded to Parker under the Newmont Mining Corporation's 1987 Key Employees Stock Option Plan and 1992 Key Employees Stock Plan (the "Stock Plans") shall be amended effective November 30, 1993 to provide that such options shall continue to vest during Parker's service during calendar year 1994, in accordance with the vesting schedule set forth in the grant of such options. 5. Reimbursement of Expenses. Parker shall be entitled to be reimbursed for reasonable travel and other expenses incurred in connection with services rendered to the Boards of Directors and the Companies during 1994 and 1995 upon a basis consistent with the policies of the Companies. -3- 4 6. Covenant Not to Disclose. Parker acknowledges that as a result of the services to be rendered to the Companies hereunder, Parker will be brought into close contact with many confidential affairs of the Companies, their subsidiaries, affiliates and customers, not readily available to the public. In recognition of the foregoing, Parker covenants and agrees that he shall not, except (i) as may be necessary in the discharge of his duties with the Companies; (ii) as the Board of Directors of either of the Companies may expressly authorize in writing; or (iii) as may be required by applicable law or regulations, disclose or use for his own benefit or the benefit of any person or entity with which he may be associated during the term of this Agreement and thereafter any such confidential information, knowledge or data obtained by Parker during or before the term of this Agreement which is material to the business of either or both of the Companies and not publicly available, otherwise disclosed by the Companies to third parties or recognized as standard practice. As a guide, Parker is to consider information originated, owned, controlled or possessed by the Companies, their subsidiaries or affiliates which is not disclosed in printed publications stated to be available for distribution outside the Companies, their subsidiaries and affiliates as being confidential. In -4- 5 instances where doubt does or should reasonably be understood to exist in Parker's mind as to whether information is confidential to the Companies, their subsidiaries and affiliates, Parker agrees to request an opinion, in writing, from the Companies. 7. Release. In consideration of the foregoing, Parker releases and discharges the Companies and their officers and directors from any and all claims, obligations or liabilities which have arisen or which may arise by reason of the termination of Parker's employment with the Companies, except with respect to enforcement of this Agreement, benefits under any employer sponsored benefit plan in which Parker participates or Parker's rights to indemnification by the Companies arising from his status as an officer and director. The terms "claims, obligations, or liabilities" shall include, but not be limited to, any and all claims of discrimination under Title VII of the Civil Rights Act of 1964, as amended; and any other federal, state or local law, or any other claim before any state or federal court, tribunal, or administrative agency arising out of or in any way related to Parker's employment relationship with the Companies and the termination of that relationship. 8. Termination of Agreement by Parker. Parker may terminate this Agreement at any time by giving the -5- 6 Companies 60 days prior written notice of his election to terminate. Parker shall be entitled to the compensation and other benefits provided herein through the effective date of such termination but shall not thereafter be entitled to receive any compensation or benefits hereunder; provided, however, that such termination shall not affect any rights he has as a retired employee under any employee benefit plans of the Companies. The provisions of paragraph 7 shall continue to apply according to its terms. 9. General (a) Assignment. This Agreement is a personal contract and, except as specifically set forth herein, the rights and interests of Parker herein may not be sold, transferred, assigned, pledged or hypothecated. The rights and obligations of the Companies hereunder shall be binding upon and run in favor of the successors and assigns of the Companies. (b) Governing Law; Captions. This Agreement contains the entire agreement between the parties with respect to the subject matter herein addressed and shall be governed by the law of the State of Colorado. It may not be changed orally, but only by agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought. Paragraph -6- 7 headings are for convenience of reference only and shall not be considered a part of this Agreement. (c) Prior Agreements. This Agreement supersedes and terminates all prior agreements between the parties relating to the subject matter herein addressed, provided, however, that nothing in this Agreement shall be deemed to restrict or abrogate the supplemental pension benefits and the right to suitable office space and secretarial facilities to be accorded to Parker pursuant to the resolution set forth in the minutes of the meeting of the Board of Directors of Mining dated October 26, 1988. (d) Notices. Any notice or other communication required or permitted hereunder shall be sufficiently given if delivered in person (in the Companies' case to their respective Corporate Secretaries), or sent by telex, telecopy or by registered or certified mail, postage prepaid, in the case of Parker, addressed as follows: 13 Sunset Drive, Englewood, Colorado 80110 and in the case of the Companies, addressed as follows: 1700 Lincoln Street, Denver, Colorado 80203 Attention: Corporate Secretary, or such other address or number as shall be furnished in writing by either party to the other, and such notice or communication shall be deemed to have been given as of the date so delivered, sent by telecopier, telex or mailed. -7- 8 IN WITNESS WHEREOF, the Companies have by their appropriate officers signed this Agreement and Parker has signed this Agreement, as of the day and year first above written. NEWMONT MINING CORPORATION By /s/ RONALD C. CAMBRE Name: Ronald C. Cambre Title: Vice Chairman and Chief Executive Officer NEWMONT GOLD COMPANY By /s/ RONALD C. CAMBRE Name: Ronald C. Cambre Title: Vice Chairman and Chief Executive Officer /s/ GORDON R. PARKER Gordon R. Parker -8- EX-10.(T) 6 AMENDMENT DATED 12/15/93 TO THE PENSION PLAN 1 EXHIBIT 10(t) AMENDMENT TO PENSION PLAN OF NEWMONT MINING CORPORATION THIS AMENDMENT to the Pension Plan of Newmont Mining Corporation (the "Pension Plan") is executed this 15th day of December, 1993, to be effective as of the dates set forth below. RECITALS 1. Newmont Mining Corporation, a Delaware corporation (the "Corporation"), previously established and currently maintains the Pension Plan. 2. Section 9.1 of the Pension Plan provides that the Board of Directors of the Corporation may modify or amend the Pension Plan at any time and from time to time. Pursuant to that right and power so reserved to the Board of Directors of the Corporation, the Pension Plan is hereby amended, as set forth below, effective as of the dates set forth below. AMENDMENT 1. Effective as of January 1, 1993, Section 1.20 is hereby amended by the insertion, immediately following the first sentence thereof, of the following: "If any portion of a bonus is paid in the form of Company stock, such portion of the bonus will only be included in Salary to the extent that the Participant does not forfeit the stock. The value of the stock shall be the value assigned by the Board of Directors when the stock is awarded." 2. Effective as of January 1, 1993, Section 4 is hereby amended by the addition of the following new Section 4.7: "4.7 Direct Rollover Election. (a) A Participant, an Alternate Payee who is the spouse or former spouse of a Participant, or a surviving spouse of a deceased Participant (collectively, the "distributee") may direct the Trustee to pay all or any portion of his "eligible rollover distribution" to an "eligible retirement plan" in a "direct rollover." Within a reasonable period of time before an eligible rollover distribution, the Administration Committee shall inform the distributee of this direct rollover option, the appropriate withholding rules, other rollover options, the options regarding income taxation, and any other information required by Code section 2 402(f). If a distribution is one to which sections 401(a)(11) and 417 of the Internal Revenue Code do not apply, such distribution may commence less than 30 days after the notice required under section 1.411(a)- 11(c) of the Income Tax Regulations is given, provided that: (1) the plan administrator clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option), and (2) the Participant, after receiving the notice, affirmatively elects a distribution. For purposes of the foregoing sentence, a distributee is treated as a Participant. (b) An "eligible rollover distribution" is any distribution or in-service withdrawal other than (i) distributions required under Code section 401(a)(9), (ii) distributions of amounts that have already been subject to federal income tax (such as defaulted loans), (iii) installment payments in a series of substantially equal payments made at least annually and (A) made over a specified period of ten or more years, (B) made for the life or life expectancy of the distributee, or (C) made for the joint life or life expectancy of the distributee and his designated beneficiary, or (iv) any other actual or deemed distribution specified in the regulations issued under Code section 402(c). (c) For a Participant or an Alternate Payee who is the spouse or former spouse of a former or current Participant, an "eligible retirement plan" is an individual retirement account or annuity described in Code section 408(a) or 408(b), an annuity plan described in Code section 403(a), or the qualified trust of a defined contribution plan that accepts eligible rollover distributions. For a surviving spouse of a deceased Participant, an "eligible retirement plan" is an individual retirement account or annuity. (d) A "direct rollover" is a payment by the Trustee to the eligible retirement plan specified by the distributee. (e) An "Alternate Payee" is a former or current Participant's spouse, former spouse, child, or other dependent who is recognized by a qualified domestic relations order (within the meaning of Code section 414(p)) as having a right to receive all, or a portion of, the benefits payable under this Plan with respect to the Participant or former Participant." IN WITNESS WHEREOF, this Amendment has been executed the date and year first set forth above. NEWMONT MINING CORPORATION ATTEST: ______________________________ By:__________________________ EX-11 7 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11 NEWMONT MINING CORPORATION AND SUBSIDIARIES COMPUTATION OF PER SHARE EARNINGS (In thousands, except per share) PRIMARY EARNINGS PER SHARE CALCULATION
Years Ended December 31, ------------------------------- 1993 1992 1991 -------- --------- ------- INCOME DATA: Income before cumulative effect of changes in accounting principles $ 94,669 $ 90,621 $94,278 Preferred stock dividends (15,910) (1,747) - -------- --------- ------- Income before cumulative effect of changes in accounting principles applicable to common shares 78,759 88,874 94,278 Cumulative effect of changes in accounting principles 38,470 (11,572) - -------- --------- ------- Net income applicable to common shares $117,229 $ 77,302 $94,278 ======== ========= ======= COMMON AND COMMON EQUIVALENT SHARES*: Weighted average common shares 85,286 84,887 84,505 Equivalent common shares from stock options 176 146 55 -------- --------- ------- Common and common equivalent shares 88,462 85,033 84,560 ======== ========= ======= EARNINGS PER COMMON SHARE: Income before cumulative effect of changes in accounting principles $ 0.92 $ 1.04 $ 1.11 Cumulative effect of changes in accounting principles 0.45 (0.14) - -------- --------- ------- Net income per common and common equivalent shares $ 1.37 $ 0.90 $ 1.11 ======== ========= =======
* Share amounts have been restated for the 1.2481 shares for 1 share stock split declared March 21, 1994. 2 NEWMONT MINING CORPORATION AND SUBSIDIARIES COMPUTATION OF PER SHARE EARNINGS (In thousands, except per share) FULLY DILUTED EARNINGS PER SHARE CALCULATION
Years Ended December 31, -------------------------------- 1993 1992 1991 -------- --------- -------- INCOME DATA: Income before cumulative effect of changes in accounting principles $ 94,669 $ 90,621 $ 94,278 Cumulative effect of changes in accounting principles 38,470 (11,572) - -------- --------- -------- Net income applicable to common shares $133,139 $ 79,049 $ 94,278 ======== ========= ======== COMMON AND COMMON EQUIVALENT SHARES*: Weighted average common shares 85,286 84,887 84,505 Equivalent common shares from stock options 352 146 115 Equivalent common shares from conversion of preferred stock 7,899 7,899 - -------- --------- -------- Common and common equivalent shares 93,537 92,932 84,620 ======== ========= ======== EARNINGS PER COMMON SHARE: Income before cumulative effect of changes in accounting principles $ 1.01 $ 0.98 $ 1.11 Cumulative effect of changes in accounting principles 0.42 (0.13) - -------- --------- -------- Net income per common and common equivalent shares $ 1.43 $ 0.85 $ 1.11 ======== ========= ========
* Share amounts have been restated for the 1.2481 shares for 1 share stock split declared March 21, 1994. EX-12 8 STATEMENT RE COMPUTATION OF RATIO OF EARNINGS 1 Exhibit 12 Newmont Mining Corporation and Subsidiaries COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Amounts in thousands except ratios) (Unaudited)
Year Ended December 31, ----------------------------------------------------------- 1993 1992 1991 1990 1989 -------- -------- -------- -------- -------- Earnings: Income before income taxes and cumulative effect of changes in accounting principles $113,234 $ 93,399 $122,218 $240,460 $102,359 Adjustments: Net interest expense (1) 12,393 14,555 13,021 42,373 91,784 Amortization of capitalized interest 1,814 1,410 1,668 1,236 2,365 Portion of rental expense representative of interest 800 1,088 1,572 2,017 2,308 Minority interest of majority- owned subsidiaries that have fixed charges 11,113 7,580 12,455 14,021 13,706 Undistributed income of less than 50% owned equities (3,526) - - (7,460) - -------- -------- -------- -------- -------- $135,828 $118,032 $150,934 $292,647 $212,522 ======== ======== ======== ======== ======== Fixed Charges: Net interest expense (1) $ 12,393 $ 14,555 $ 13,021 $ 42,373 $ 91,784 Capitalized interest 8,480 2,405 - - 2,269 Portion of rental expense representative of interest 800 1,088 1,572 2,017 2,308 -------- -------- -------- -------- -------- $ 21,673 $ 18,048 $ 14,953 $ 44,390 $ 96,361 ======== ======== ======== ======== ======== Ratio of Earnings to Fixed Charges 6.3 6.5 10.3 6.6 2.2 === ==== ==== === ===
(1) Includes interest expense of majority-owned subsidiaries and amortization of debt issuance costs. EX-21 9 SUBSIDIARIES 1 EXHIBIT (21) SUBSIDIARIES OF NEWMONT
Name Ownership State of Incorporation Newmont Gold Company 89.22 Delaware
EX-23 10 CONSENT 1 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our reports included in this Form 10-K, into Newmont Mining Corporation's previously filed Registration Statements on Form S-8 (Nos. 33-10141, 33-15558 and 33-49872) and Form S-3 (No. 33-45325). /s/ ARTHUR ANDERSEN & CO. Arthur Andersen & CO. Denver, Colorado, March 26, 1993 EX-24 11 POWER OF ATTORNEY 1 EXHIBIT 24 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Timothy J. Schmitt his true and lawful attorney-in-fact and agent, with full power of substitution and revocation, in his name and on his behalf, to do any and all acts and things and to execute any and all instruments which they and each of them may deem necessary or advisable to enable Newmont Mining Corporation to comply with the Securities Exchange Act of 1934, as amended (the "Act"), and any rules, regulations or requirements of the Securities and Exchange Commission in respect thereof, including power and authority to sign his name in any and all capacities (including his capacity as a Director and/or Officer of Newmont Mining Corporation) to the Annual Report on Form 10-K of Newmont Mining Corporation for the fiscal year ended December 31, 1993 and the undersigned hereby ratifies and confirms all that said atttorney-in-fact and agent shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have subscribed these presents as of the 16th day of March 1994. Signature Title - --------- ----- /s/ RUDOLPH I.J. AGNEW - ---------------------------- Director Rudolph I.J. Agnew /s/ JOHN P. BOLDUC - ---------------------------- Director John P. Bolduc /s/ RONALD C. CAMBRE - ---------------------------- Chief Executive Officer and Ronald C. Cambre Vice Chairman and Director (Principal Executive Officer) /s/ JOSEPH P. FLANNERY - ---------------------------- Director Joseph P. Flannery /s/ THOMAS A. HOLMES - ---------------------------- Director Thomas A. Holmes /s/ GORDON R. PARKER - ---------------------------- Chairman and Director Gordon R. Parker /s/ T. PETER PHILIP - ---------------------------- President and Chief Operating T. Peter Philip Officer and Director /s/ ROBIN A. PLUMBRIDGE - ---------------------------- Director Robin A. Plumbridge /s/ WILLIAM I.M. TURNER, JR. - ---------------------------- Director William I.M. Turner, Jr. /s/ WAYNE W. MURDY - ---------------------------- Senior Vice President Wayne W. Murdy and Chief Financial Officer (Principal Financial Officer) /s/ GARY E. FARMAR - ---------------------------- Vice President and Controller Gary E. Farmar (Principal Accounting Officer) -----END PRIVACY-ENHANCED MESSAGE-----