10-K405
1
FORM 10-K
1
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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, 1994
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 9, 1995 WAS APPROXIMATELY $3,430,500,000.
THE NUMBER OF SHARES OF REGISTRANT'S COMMON STOCK OUTSTANDING AT MARCH 9, 1995
WAS 86,083,676.
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 4, 1995 (PART III).
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2
PART I
ITEMS 1 AND 2. BUSINESS AND PROPERTIES
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. Newmont Gold Company, together with its subsidiaries
(unless the context otherwise requires), is referred to herein as "NGC." NGC is
a worldwide company engaged in gold production, exploration for gold and
acquisition of gold properties. Newmont owns 89.2% of the common stock, 100% of
the preferred stock and options to purchase additional shares of the common
stock of NGC. Newmont, together with NGC and NGC's subsidiaries, are referred to
herein as the "Corporation."
In a transaction (the "Transaction") effective January 1, 1994, NGC
acquired all of Newmont's assets (other than 85,850,101 shares of NGC's common
stock owned by Newmont), and assumed all liabilities of Newmont (except for
Newmont's obligations with respect to Newmont's outstanding $5.50 convertible
preferred stock (the "NMC Preferred Stock") and employee stock options of
Newmont (the "NMC Options") exercisable for the common stock of Newmont). In
addition, NGC issued to Newmont (i) 2,875,000 shares of $5.50 convertible
preferred stock of NGC (the "NGC Preferred Stock"), with terms identical to the
NMC Preferred Stock, except that it is convertible into shares of common stock
of NGC and (ii) options to purchase shares of common stock of NGC (the "NGC
Options") in the same number and with the same exercise prices (after adjusting
for a stock split effected in connection with the Transaction) as the NMC
Options. As a result of the Transaction, all operating activities of the
Corporation are conducted by NGC and Newmont has no business other than the
ownership of the common stock of NGC, the NGC Preferred Stock and the NGC
Options and its obligations with respect to the NMC Preferred Stock and the NMC
Options. The Transaction did not have any significant impact on the
Corporation's consolidated financial results.
All of the Corporation's consolidated sales and operating profit in 1994,
1993 and 1992 related to its gold mining activities in the United States. A
substantial amount of the Corporation's consolidated identifiable assets also
related to these activities. Gold sales accounted for all of the Corporation's
consolidated sales revenues from continuing operations in 1994, 1993 and 1992.
NEWMONT GOLD COMPANY
OVERVIEW
In 1994, NGC produced approximately 1.56 million ounces of gold from 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, which is scheduled to commence gold
production in mid-1995, and an 80%-owned venture in Indonesia, which is
scheduled to commence gold production in early 1996.
CARLIN, NEVADA
Production
NGC's North American operations are located on the geographical feature
known as the Carlin Trend, near Carlin, Nevada. See map on page 3 herein. The
Carlin Trend is the largest gold district discovered in North America this
century. At the end of 1994, NGC had 18,544,000 ounces of gold in proven and
probable ore reserves on the Carlin Trend.
From the Carlin Trend, production was 1,555,300 ounces in 1994 compared
with 1,674,200 ounces in 1993 and 1,598,900 ounces in 1992. Gold production at
NGC's Nevada operations is expected to be approximately 1.6 million ounces in
1995.
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In 1994, ore was produced from six open-pit deposits (Genesis, Post,
Carlin, Gold Quarry, Tusc and Rain) and from two underground mines (Carlin East
and Rain). The Rain open-pit mine was decommissioned in late 1994 when its ore
reserves accessible from open-pit mining were depleted. The Tusc mine, a
satellite deposit to NGC's largest mine, Gold Quarry, opened in May 1994. Two
additional open-pit mines, Lantern and North Star, will be mined in 1995.
The Carlin East underground mine, located under the original Carlin pit,
and the Rain underground mine commenced production in late 1994. An additional
underground mine, Carlin Main, is being developed beneath the original Carlin
pit and is scheduled to commence production in early 1995. Another underground
mine, Deep Star, is scheduled to open in late 1995. The four underground mines
are expected to produce in excess of 100,000 ounces in 1995.
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 9.5 million ounces of
proven and probable reserves of gold, of which NGC owns 5.1 million ounces and
Barrick the remaining 4.4 million ounces. The parties 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 -- "Management's Discussion and Analysis of
Results of Operations and Financial Condition."
MINE PRODUCTION
DRY SHORT TONS
(000S)
1994 1993
---------------------------------------------- ------------------------------------------------------
MILL LEACH MILL LEACH
DEPOSIT ORE ORE OVERBURDEN TOTAL ORE ORE OVERBURDEN TOTAL
-------------------- ------ ------ ---------- ---------- ---------- ---------- ---------- ----------
Genesis............. 3,354 10,591 44,198 58,143 2,336 12,704 50,413 65,453
Carlin.............. 120 961 1,852 2,933 64 2,789 3,929 6,782
Post................ 404 3,942 43,186 47,532 420 1,066 15,188 16,674
Gold Quarry/Tusc.... 9,618 35,339 58,034 102,991 11,005 36,760 56,283 104,048
Rain................ 318 1,233 930 2,481 1,049 2,951 7,758 11,758
------ ------ ---------- ---------- ---------- ---------- ---------- ----------
Total...... 13,814 52,066 148,200 214,080 14,874 56,270 133,571 204,715
====== ====== ========== ======== ====== ====== ========== ========
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 Nevada deposits. Such long-term leases
extend for at least the anticipated mine life of those deposits. With respect to
Gold Quarry, NGC owns a 10% undivided interest in the minerals in a majority of
the present and projected mining areas, 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's royalty commitments to other
parties with respect to other portions of the Gold Quarry property and certain
of its other properties are much less significant. 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 92% 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.
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[INSERT NEVADA MAP -- FULL PAGE]
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Refractory Ore Treatment Plant
In September 1994, NGC completed construction of a refractory ore treatment
plant, known as Mill No. 6, to oxidize refractory ores. Partial operation was
achieved in October, but because of a crack in a weld of a riding ring of the
double rotator mill and a fire in the electrostatic precipitator, final start-up
was delayed until the end of December 1994. Full capacity is expected to be
achieved by mid-1995. Ore processed through the plant in 1995 is expected to
produce in excess of 400,000 ounces of gold. For a discussion of the financing
of the refractory ore treatment plant, see Note 7 to Item 8 -- "Financial
Statements and Supplementary Data."
The facility will enable NGC to oxidize and treat high-grade refractory
ores that contain both sulfides and active carbon. Approximately 60% of NGC's
reserves on the Carlin Trend are refractory and the balance are oxide. Oxide ore
is amenable to gold extraction through the use of conventional size-reduction
processes, such as 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.
Other Mill and Leaching Facilities
NGC has five other mills (two of which are currently active), in addition
to the refractory ore treatment plant. Each of the mills involve crushing,
grinding and cyanide leaching treatment processes, with gold recovery onto
activated carbon.
Mill No. 1, which was commissioned in 1965 and has treated ore from the
Carlin, Genesis and Post mines, was closed in the Fall of 1994. Mill No. 2 was
commissioned in 1985 and is located adjacent to the Gold Quarry open pit mine.
Portions of Mill No. 2 were incorporated into the refractory ore treatment plant
in May 1994. Mill No. 3 was commissioned in 1988 and treated material from the
Rain mine. This mill was decommissioned in late 1994 when the Rain mine ore
reserves accessible from open-pit mining were depleted. Mill No. 4 was
commissioned in 1989 and is located approximately one mile northeast of the Post
deposit. Mill No. 5 was commissioned in 1988 and is located adjacent to the
refractory ore treatment plant.
Processing at the Carlin leaching operations includes crushing ore at
crushing plants, heap leaching ore on leach pads using cyanidation and gold
recovery onto activated carbon through carbon adsorption.
MILL AND LEACH PRODUCTION
1994 1993
--------------------------------- ---------------------------------
GRADE GRADE
DRY SHORT (OUNCES OUNCES DRY SHORT (OUNCES OUNCES
TONS PER PRODUCED(1) TONS PER PRODUCED(1)
(000S) TON) (000S) (000S) TON) (000S)
--------- ------- ----------- --------- ------- -----------
Mill No. 1.............................. 188 0.135 24.3 960 0.094 82.5
Mill No. 2.............................. 1,034 0.081 85.1 3,368 0.090 239.2
Mill No. 3.............................. 859 0.079 59.1 903 0.101 77.0
Mill No. 4.............................. 2,736 0.129 292.3 2,692 0.111 252.5
Mill No. 5.............................. 6,264 0.077 396.1 6,419 0.081 412.3
Mill No. 6.............................. 701 0.081 44.6 -- -- --
--------- ----------- --------- -----------
Total.......................... 11,782 0.091 901.5 14,342 0.091 1,063.5
========= =========== ========= ===========
Leach Operations........................ 52,381 0.021 653.8 58,945 0.019 610.7
========= =========== ========= ===========
---------------
(1) The average mill recovery rates were 80.7% and 82.5% in 1994 and 1993,
respectively. Leach recovery from tons placed fluctuates from year-to-year
due to ore grade, differing solution application rates and cycle times, as
well as varying quantities of unleached material placed on pads.
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Bioleaching
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. NGC's patented process has proved economic on low-grade sulfidic
material that is mined as a consequence of mining for 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. In January 1995, NGC began a one million ton demonstration test of
the bioleaching process at a cost of $11.5 million. The test is expected to
result in recovery of approximately 20,000 ounces of gold in 1995. As a result
of the commercialization of the bioleaching process, 2.0 million ounces of
low-grade refractory material was added to the reserve category at the end of
1994.
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
The gold-bearing activated carbon from NGC's Carlin milling and leaching
plants is processed at a central carbon processing plant and at a refinery,
located near the carbon processing plant.
An analytical laboratory and administration offices are located in the
vicinity of Mills Nos. 5 and 6. NGC also has an advanced metallurgical research
laboratory in Salt Lake City, Utah.
Electrical power for NGC's Nevada operations is provided by public
utilities.
Refining
NGC currently has refining arrangements with four foreign refiners to
further refine dore bars 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.
Exploration
NGC conducts extensive exploration along the Carlin Trend. NGC owns or
otherwise controls the mineral interests on approximately 630 square miles of
property along the Carlin Trend. In 1994, a total of 775 holes, totalling
519,288 feet, were drilled by NGC on the Carlin Trend in connection with reserve
development and exploration activities. This compares with approximately 1,067
holes, totalling 649,100 feet, drilled in 1993. Exploration by underground
methods continues to facilitate the definitive location of deeper deposits of
gold ore.
In 1994, approximately $24 million was spent by NGC on reserve development
and exploration on the Carlin Trend. For 1995, reserve development and
exploration expenditures by NGC on the Carlin Trend are expected to be
approximately the same as 1994.
PERU
Production
NGC also produces gold through Minera Yanacocha S.A. in Peru, which 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 and mining bureau of the French
government ("BRGM"); and 5% by International Finance Corporation, which provided
financing for the
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project. In September 1994, BRGM announced its intention to transfer its
interest in Minera Yanacocha to an entity controlled by an Australian company,
Normandy Poseidon. NGC and Buenaventura filed suit in Peru to seek enforcement
of a provision in the bylaws of Minera Yanacocha giving shareholders preemptive
rights on the sale of any other shareholder's interest. Recently, an appellate
court in Peru issued a preliminary ruling in favor of NGC and Buenaventura
against BRGM. Pending further action in the case, the court has suspended the
right of BRGM's affiliate as a shareholder of Minera Yanacocha.
Minera Yanacocha has mining rights with respect to a 63,000 acre land
position, which includes the Carachugo and Maqui Maqui deposits and other
numerous prospects, located in northwest Peru. 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.
NGC manages the project. Production commenced in August 1993 at the
Carachugo deposit and in October 1994 at the Maqui Maqui deposit, which is
located three miles north of the Carachugo deposit. Contract mining is employed
at Minera Yanacocha and power for the project is provided by diesel generators
owned by Minera Yanacocha.
During 1994, its first full year of operation, Minera Yanacocha produced
approximately 304,600 ounces of gold. Production from the Carachugo mine in 1994
was 274,900 ounces, compared to the 81,500 ounces produced during the five
months of 1993 in which it was in production. Production from the Maqui Maqui
mine was 29,700 ounces during the three months of 1994 in which it was in
production. The two mines together are expected to produce approximately 450,000
ounces in 1995.
Minera Yanacocha's operations are accessible by road and are located
approximately 375 miles north of Lima and 28 miles by road north of the city of
Cajamarca. Both the Carachugo and Maqui Maqui deposits are open-pit mines which
are mined by contractors. The ore is not crushed, but transported directly to
two leach pads where the ore is treated with a cyanide solution. The leach
solution is then run through a processing plant and the gold and silver
extracted utilizing conventional gold recovery methods. The dore bars produced
are transported from the processing plant by a contractor and refined at
refineries in England and Switzerland under contract until August 1, 1995.
Total proven and probable reserves for Minera Yanacocha as of December 31,
1994 were 3,970,000 ounces compared with approximately 3,780,000 ounces as of
December 31, 1993.
Exploration
Exploration continues to be conducted at the numerous prospects owned by
the Minera Yanacocha venture. Approximately $4.2 million was spent on
exploration in 1994, with approximately 112 holes drilled. A $9 million
exploration program is currently underway in 1995.
A second Peruvian joint venture in Northern Peru was formed as of November
1993 between NGC and Buenaventura. The joint venture, which is 65% owned by NGC,
has staked claims on 500,000 acres of prospective ground along North and South
extensions of the volcanic belt hosting the Yanacocha deposits. In addition, NGC
is active in the southern part of Peru. Initial exploration work is underway in
these prospective areas and three targets have been outlined and will be drilled
in 1995.
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[INSERT NEW PERU MAP]
UZBEKISTAN
In Uzbekistan, one of the Central Asian republics of the former Soviet
Union, NGC has a 50% interest in a joint venture ("Zarafshan-Newmont") with the
Uzbekistan State Committee for Geology and Navoi Mining and Metallurgical
Combine, state entities of the Republic of Uzbekistan, to produce gold by
leaching existing stockpiles of low-grade oxide ore from the Muruntau mine.
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 to Zarafshan-Newmont 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. The project's gold will be sold in international markets for U.S. dollars.
A subsidiary of NGC is managing Zarafshan-Newmont. Production is expected
to commence in mid-1995 at an annual rate of approximately 450,000 ounces, or
225,000 ounces attributable to NGC's interest. The project facilities will
include twenty crushers in four stages. Crushed material will be transported to
lined leach pads where the ore will be treated by conventional gold recovery
methods. The resulting dore will be transported to the adjacent Muruntau gold
refinery (operated by Navoi Mining and Metallurgical Combine) where, pursuant to
a refining agreement, the dore will be refined for export. The project has
access to air, rail and road transport and as a result there are no significant
logistical difficulties for transportation of refined gold, materials and
equipment. Power for the project is provided by a contractual arrangement with
Navoi Mining and Metallurgical Combine which has its own power-generating
facilities.
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The costs for the project are estimated at approximately $220 million, half
of which is attributable to NGC. Zarafshan-Newmont completed a $105 million
credit facility for the project in November 1993 and is seeking an additional
$30 million facility. See Note 7 to Item 8 -- "Financial Statements and
Supplementary Data." NGC 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.
[INSERT UZBEKISTAN MAP]
INDONESIA
NGC has two projects in Indonesia, Minahasa and Batu Hijau, both of which
are 80% owned by NGC. The remaining 20% of each project is owned by P.T. Tanjung
Serapung and P.T. Pukuafu Indah, respectively. 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. It is approximately 1,500 miles northeast of Jakarta.
The Minahasa project will mine and process ore from three hydrothermal
deposits -- Mesel, Leons and Nibong -- which at the end of 1994 contained
approximately 2.1 million ounces of proven and probable reserves (in which NGC
has an equity interest of approximately 1.7 million ounces). These deposits
contain both oxidized and refractory gold mineralization. In July 1994, a $130
million construction project was approved to mine and process the ore from these
deposits.
Site preparation began in November 1994 and pre-production mining is
planned to be initiated in April 1995. The project facilities will include a dry
grinding mill, a small fluidized bed roaster facility and a conventional
carbon-in-pulp gold recovery plant. Infrastructure improvements such as a
deep-water port,
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electrical power plant, water supply system and a camp for workers will also be
constructed. Production is scheduled to commence in early 1996 at an annual rate
of 140,000 ounces at a cash operating cost of $200 per ounce. The Minahasa
project is expected to produce 1.8 million ounces of gold at an average cash
operating cost over the 13-year mine life of $150 per ounce. The Minahasa
project is in close proximity to the coast and does not present any significant
logistical difficulties for transportation of materials and equipment.
The second Indonesian project, Batu Hijau, is located on the island of
Sumbawa, 950 miles east of Jakarta. Batu Hijau is a large porphyry copper/gold
deposit that was discovered in 1990. Batu Hijau is located 10 miles from the
island's coast, and has access to natural harbors which can be developed for
transportation of materials, equipment and concentrate product. By year-end, a
total of 122 holes had been drilled in this deposit to an average depth of 1,341
feet. A second phase feasibility study will be required before a final decision
is made whether to proceed with development. Batu Hijau is considered to have
significant potential, although there can be no assurance that such potential
could or will be realized.
Exploration work continued through 1994 in areas surrounding the Minahasa
and Batu Hijau projects. Such work will continue in 1995 as part of NGC's
ongoing exploration program in Indonesia.
[INSERT INDONESIAN MAP]
EXPLORATION
NGC conducts its worldwide exploration activities through various
affiliates. One of these affiliates was responsible for the discovery in 1961 of
the Carlin Trend in Nevada and one discovered the existence of gold at the
Yanacocha deposit in Peru in the 1980s. In 1994, exploration expense was $69.2
million compared with $52.7 million in 1993. NGC's 1995 budget for exploration
will be lower than 1994 as NGC focuses more on previously identified prospects.
In addition to the exploratory projects specifically discussed above, NGC
is in the preliminary stages of exploration in other areas of the United States
and other parts of the world. During 1994, on-the-ground evaluations were
conducted in 30 countries and acquisition opportunities were monitored in dozens
of others.
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In Mexico, NGC is involved in two ventures that are undergoing
prefeasability studies -- La Herradura, a 45,000 acre site just south of the
U.S. border in Northern Mexico, and Mezcala in southern Mexico. NGC has a 44%
interest in La Herradura and can earn a 44% interest in the Mezcala project by
investing $15 million over the next two years. The balance of both ventures
would be held by Servicios Industriales Penoles, S.A. de C.V., a leading Mexican
mining company that would be the operator.
Exploration is continuing in Canada, where NGC has completed a drilling
program with its partner, Westmin Resources, on four targets in northeastern
Yukon. NGC can earn a 65% interest in the project by investing C$10.5 million
(approximately $7.5 million at current exchange rates), of which C$3 million has
been invested in the past two years.
In addition to its activities in Peru, NGC is exploring other projects in
South America, including early-stage drilling projects in Ecuador. NGC is also
monitoring prospects in Argentina, Bolivia, Brazil and Venezuela.
In Asia, NGC has a 93% interest in a joint venture for exploration in Laos.
The joint venture agreement covers approximately 2,500 square miles of land
which has advanced to drill testing. Although grassroots programs in Thailand
have been scaled back, NGC continues to pursue exploration in the Asia/Pacific
region, including opportunities in the Philippines and China.
Drilling is scheduled to begin in 1995 in Burkina Faso in Western Africa.
NGC can earn a 45% interest in a 1,350 square mile concession in which Randgold
and Exploration Company Limited of South Africa would be the operator.
In the United States, exploration continues at various locations. The
Grassy Mountain deposit in Oregon, which was classified as a reserve since its
acquisition in 1992, was reclassified at the end of 1994 as mineralized
material. Further evaluations are being conducted to define the economic
potential of the ore body, including consideration of an underground mine.
Exploration activities in Idaho at the Musgrove Creek deposit also are
continuing, although with mixed results. North of the Carlin Trend, drilling in
1994 on 5 of 17 targets on the 100 square mile Ivanhoe property was
disappointing. Future activity in the area will focus on the smaller Hollister
deposit. In 1995, exploration also will continue in several western states,
including Wyoming and Alaska.
There can be no assurances that any of NGC's exploration activities will
result in any new joint ventures or other projects or that such new joint
ventures or projects would result in profitable operations.
NGC's exploration team has a staff of approximately 200 geologists,
geochemists or geophysicists. State-of-the-art technology, including airborne
geophysical data acquisition systems, satellite location devices and
field-portable imaging systems, also aids in the location of prospective
targets.
MARKETING
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. Since the end of 1993 the Corporation has not engaged in any hedging
transactions on current production and none of NGC's 1994 production was hedged.
However, in 1994, 625,000 ounces of the first five years of production from the
Minahasa project has been sold on a forward basis averaging $454 per ounce with
a 40% participation in prices above that level.
See Note 12 to Item 8 -- "Financial Statements and Supplementary Data" for
information regarding major customers and export sales.
GENERAL
Certain of NGC's projects are located in foreign countries. Such projects
may be affected adversely by exchange controls, currency fluctuations, ownership
limitations, expropriation, taxation and laws or policies of particular
countries, as well as the laws and policies of the United States affecting
foreign trade, investment and taxation.
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NGC does not hold material patents or other material licenses, franchises
or concessions in connection with its business.
Capital expenditures incurred by NGC for continuing operations were
approximately $402 million, $235 million and $213 million in 1994, 1993 and
1992, respectively. NGC has an established program for the maintenance and
repair of its equipment and facilities. Management believes that NGC's
facilities are generally in a state of good repair. NGC 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, see Item 7 -- "Management's Discussion
and Analysis of Results of Operations and Financial Condition."
There were 2,835 persons employed by NGC at December 31, 1994.
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 NGC'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 NGC's control, including industrial and
jewelry demand, expectations with respect to the rate of inflation, the strength
of the U.S. 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. In addition, the price of gold sometimes is subject to rapid short-term
changes because of speculative activities.
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 NGC's revenue from gold sales falls for a substantial period below its
cost of production at any or all of its operations, NGC could determine that it
is not economically feasible to continue commercial production at any or all of
its operations. NGC's costs of production (which are equal to its costs
applicable to sales on its income statement) for its Nevada operations were $210
per ounce of gold sold in 1994, $199 in 1993 and $198 in 1992.
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The gold market generally is characterized by volatile prices and strong
competition. 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
----------------------------------------------------------- ----- ----- -------
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....................................................... 395 378 384
1995 (through March 9)..................................... 384 372 378
---------------
Source of Data: Metals Week
On March 9, 1995, the afternoon fixing for gold on the London Bullion
Market was $381 and the spot market price of gold on the New York Commodity
Exchange was $381. 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.
PROVEN AND PROBABLE ORE RESERVES
Newmont's equity in the proven and probable reserves of NGC was
approximately 23,298,000 ounces and 23,172,000 ounces(1) of gold at December 31,
1994 and December 31, 1993, respectively.
NGC's estimate of its proven and probable ore reserves at December 31, 1994
and 1993 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, 1994 and 1993, 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,
1994 year-end reserves would decrease by approximately 17%. Conversely, if its
reserve estimates were to be based on a gold price of $500 per ounce with
current operating costs, 1994 year-end reserves would increase by approximately
20%. These reserves represent the total quantity of ore to be extracted from the
deposits or stockpiles, allowing for mining efficiencies and ore dilution. The
contained ounces are prior to any losses during metallurgical treatment.
---------------
(1) On a pro-forma basis giving effect to the Transaction.
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DECEMBER 31, 1994 DECEMBER 31, 1993
----------------------------------------- -----------------------------------------
DRY SHORT GRADE CONTAINED EQUITY DRY SHORT GRADE CONTAINED EQUITY
DEPOSITS WITH PROVEN PERCENT TONS (OUNCES OUNCES OUNCES TONS (OUNCES OUNCES OUNCES
AND PROBABLE RESERVES(1) EQUITY (000S) PER TON) (000S) (000S) (000S) PER TON) (000S) (000S)
-------------------------------- ------- --------- -------- --------- ------ --------- -------- --------- ------
Carlin, Nevada
Gold Quarry/Mac/Tusc.......... 100% 162,222 0.045 7,286 7,286 164,244 0.042 6,822 6,822
Carlin/Pete/Lantern........... 100% 15,113 0.045 686 686 8,492 0.028 240 240
Genesis/North Star/Deep
Star........................ 100% 54,079 0.043 2,306 2,306 66,724 0.043 2,879 2,879
Post/Goldbug/Barrel........... 100% 27,957 0.184 5,147 5,147 30,812 0.169 5,217 5,217
Capstone/Bootstrap/Tara....... 100% 28,041 0.040 1,127 1,127 28,089 0.040 1,130 1,130
Rain/SMZ/Emigrant Springs..... 100% 4,982 0.040 199 199 5,843 0.038 222 222
Stockpiles and in process..... 100% 37,558 0.048 1,793 1,793 30,781 0.041 1,259 1,259
--------- --------- ------ --------- --------- ------
Total Carlin(2)(3).......... 329,952 0.056 18,544 18,544 334,985 0.053 17,769 17,769
--------- --------- ------ --------- --------- ------
Minera Yanacocha, Peru
Carachugo..................... 38% 45,264 0.027 1,209 460 37,663 0.033 1,231 468
Maqui Maqui................... 38% 56,612 0.047 2,680 1,018 44,930 0.056 2,497 949
Stockpiles and in process..... 38% 1,846 0.044 81 31 2,073 0.025 52 19
--------- --------- ------ --------- --------- ------
Total Yanacocha(4).......... 103,722 0.038 3,970 1,509 84,666 0.045 3,780 1,436
--------- --------- ------ --------- --------- ------
Zarafshan-Newmont,
Uzbekistan(5)................. 50% 242,508 0.036 8,674 4,337 242,508 0.036 8,674 4,337
--------- --------- ------ --------- --------- ------
Minahasa, Indonesia
Mesel/Leons/Nibong............ 80% 9,668 0.207 2,006 1,605 8,380 0.215 1,799 1,439
Other......................... 80% 858 0.164 141 112 -- -- -- --
--------- --------- ------ --------- --------- ------
Total Minahasa(6)........... 10,526 0.204 2,147 1,717 8,380 0.215 1,799 1,439
--------- --------- ------ --------- --------- ------
Grassy Mountain, Oregon(7)...... 100% -- -- -- -- 15,984 0.062 996 996
--------- --------- ------ --------- --------- ------
Total....................... 686,708 0.049 33,335 26,107 686,523 0.048 33,018 25,977
========= ========= ====== ========= ========= ======
---------------
(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.
(2) Calculated using cutoff grades for 1994 and 1993 as follows: oxide leach
material not less than 0.006 ounce per ton; refractory leach material (for
the Gold Quarry, Mac and Tusc deposits only) not less than 0.03 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 (1993 values in
parenthesis): Mill No. 1 -- N/A (85%); Mill No. 2 -- N/A (85%); Mill No.
3 -- 85% (86%); Mill No. 4 -- 81% (82%); Mill No. 5 -- 85% (85%). The
average refractory mill recoveries utilized were: Mill No. 1 -- N/A (85%);
Mill No. 6 -- 88% (88%). The average leach recoveries utilized for oxide
material were as follows: North Area Leach Facility -- 64% (65%); South Area
Leach Facility -- 69% (70%); Rain Area Leach Facility -- 56% (56%). The
following average leach recovery was utilized for refractory bioleach
material in the Gold Quarry, Mac and Tusc deposits: 60% (engineered
estimate).
The term "cut-off grade" means the lowest grade of mineralized rock that can
be included in the reserve 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.
(3) Approximately 60% 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. Refractory reserves of mill-grade material contain at
least 0.07 ounces per ton. Refractory reserves of leach-grade material (Gold
Quarry, Mac and Tusc deposits only) contain at least 0.03 ounces per ton.
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(4) Calculated by NGC using a cutoff grade not less than 0.010 ounces per ton.
Reserves are contained in two main deposits, Carachugo and Maqui Maqui.
Material is being leached. Assumed leach recovery is 60% to 83%, depending
on each deposit's metallurgical properties. All ore is oxidized.
(5) 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 Zarafshan-Newmont for processing, from
the designated stockpiles or from other specified sources, are guaranteed by
state entities of Uzbekistan.Material will be crushed and leached. The
feasibility study prepared by Zarafshan-Newmont used a 50% to 65% leach
recovery rate, depending on material type.
(6) Calculated by NGC using 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.
(7) As published by the previous owner. Evaluations completed by NGC
demonstrated that the geologic model used by the previous owner was
inadequate for mine development and that pending completion of additional
evaluations, the deposit should no longer be classified as a reserve.
ENVIRONMENTAL MATTERS
GENERAL
NGC's U.S. gold mining and processing operations are subject to extensive
federal, state and local governmental regulations for the protection of the
environment, including those relating to the protection of air and water quality
and mine reclamation, and for the promotion of mine and occupational safety.
Management does not believe that compliance with such regulations will have a
material adverse effect on its competitive position. At this time NGC 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 NGC's total costs of
operations. Since NGC 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
NGC 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 NGC in terms of
increased capital and operating expenditures.
It is estimated that with respect to NGC'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 $94 million in 1994, primarily as
part of the construction of NGC's refractory ore treatment plant and will
require approximately $25 to $30 million of such capital expenditures in 1995.
Thereafter, annual capital expenditures for such compliance measures are
expected to be less than $20 million.
NGC'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 NGC'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 NGC's capital and operating expenditures. It is estimated that
compliance with regulations for the protection of the environment will require
capital expenditures of approximately $2 million in 1995 in connection with the
Zarafshan-Newmont joint venture and approximately $5 million in 1995 in
connection with the Minahasa project in Indonesia.
NGC is involved in an on-going action involving a mining property located
in Colorado which is jointly owned by Resurrection Mining Company (a subsidiary
of NGC acquired from Newmont in the Transaction) and an unrelated third party
which operates the property. For additional information on these matters, see
Item 3 -- "Legal Proceedings" and Notes 10 and 14 to Item 8 -- "Financial
Statements and Supplementary Data."
NEVADA OPERATIONS
NGC'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-
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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.
In 1986, the EPA determined that the regulation of "extraction" and
"beneficiation" wastes from mining operations under Subtitle C of RCRA was not
warranted and these wastes have been exempted from RCRA pursuant to the Bevill
Amendment. However, the EPA began to develop specific regulations for such
wastes under Subtitle D. NGC is participating in that process. Currently, there
is not a sufficient basis to predict the potential impact of such regulations on
NGC.
Wastes from the "processing" of ores and minerals (including refining
wastes) at NGC's Nevada operations is subject to regulation under Subtitle C of
RCRA. NGC recycles substantially all of the potentially hazardous secondary
materials generated during refining operations in compliance with Subtitle C.
Such compliance has not had, and is not expected to have, any material impact on
NGC's operations.
NGC's Nevada operations are subject to stringent state permitting
regulations for protection of surface and groundwater, as well as wildlife.
These regulations may require additional capital and operating expenditures for
expansion of current operations and development of new projects and may increase
closure and reclamation costs for pits, tailing impoundment and leaching
facilities.
Mining operations have the potential to produce fugitive dust emissions
which 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
of air quality. The 1990 amendments to the federal Clean Air Act could
ultimately increase NGC's compliance costs for air pollution permitting and/or
control, but the impact on NGC's mining operations is so dependent on future
regulations and other contingencies that it cannot reasonably be predicted at
this time.
ITEM 3. LEGAL PROCEEDINGS
In December 1983, the State of Colorado filed a lawsuit in the U.S.
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),
was 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.
Both cases involve 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 Cloud Mine, the Yak Tunnel, and
adjacent property, and seek remedial actions and damages from a number of
defendants, including Newmont and NGC's wholly owned subsidiary, Resurrection
Mining Company ("Resurrection"), which is a partner with ASARCO in the
Res-ASARCO Joint Venture. In August, 1994, the Court entered a Partial Consent
Decree between and among the United States, Newmont, Resurrection and certain
defendants. The Partial Consent Decree obligates Resurrection to pay for and
perform the cleanup of sources of contamination in various areas, pursuant to
the Superfund administrative process. The precise cleanup remedy is subject to
further investigation and study, EPA selection in accordance with Superfund and
public comment. At this time, the precise remedy and cost have not been fixed.
The proposed settlement also requires Resurrection to reimburse the governments
for their past response costs. Further, Resurrection's cleanup and reimbursement
obligations are subject to certain sharing percentages with at least one other
defendant. The Partial Consent Decree does not resolve certain other potential
liabilities, including liability for any natural resource damage and any
groundwater or surface water contamination. See Note 14 to Item 8 -- "Financial
Statements and Supplementary Data."
On March 6, 1995, a class action complaint was filed in the U.S. District
Court for the Southern District of Ohio against Newmont, Cyprus Foote Mineral
Company and others. The complaint alleges that the named plaintiffs (Sue Ann
Malernee and seven other individuals) and the putative class members have been
exposed to certain allegedly radioactive or otherwise hazardous waste materials
produced at a ferroalloy production plant in Guernsey County, Ohio. That plant
was owned until 1987 by Foote Mineral Company, a former
15
17
subsidiary of Newmont and predecessor to defendant Cyprus Foote. The complaint
seeks recovery of response costs and establishment of a medical monitoring fund
under CERCLA, 42 U.S.C. 9601 et seq. It also seeks compensatory damages under
various tort law theories for, inter alia, diminution in property values,
increased risk of physical injury and emotional distress. The amount of such
damages are alleged to be $500 million. Punitive damages are sought against
Newmont in the amount of approximately $63 million. Injunctive relief requiring
defendants to remove the allegedly hazardous materials from the property of the
plaintiffs is also requested. The Corporation is investigating this newly-filed
action, and intends to vigorously contest all alleged liability in this matter.
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,
1994.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
Newmont's executive officers as of March 9, 1995 were:
NAME AGE OFFICE
------------------------ --- -----------------------------------------------
Ronald C. Cambre 56 Chairman, President and Chief Executive Officer
Graham M. Clark, Jr. 49 Senior Vice President and General Counsel
Lawrence T. Kurlander 55 Senior Vice President, Administration
Wayne W. Murdy 50 Senior Vice President and Chief Financial
Officer
David A. Baker(1) 40 Vice President, Environmental Affairs
Kenneth A. Brunk(1) 49 Vice President, Business Development
Marcel F. DeGuire(1) 45 Vice President, Project Development and
Regional Director, Commonwealth of
Independent States
Mary E. Donnelly(1) 43 Vice President, Government Relations
John A. S. Dow(1) 49 Vice President and Regional Director, Indonesia
and Southeast Asia
Gary E. Farmar 41 Vice President and Controller
Eric Hamer(1) 52 Vice President, Indonesian Projects
Leonard Harris(1) 67 Vice President and Regional Director, South
America
Donald G. Karras 41 Vice President, Taxes
Leendert G. Krol(1) 55 Vice President, Exploration
Michael G. Moran(1) 53 Vice President, Engineering Services
Jack H. Morris(1) 55 Vice President, Corporate Relations
W. James Mullin(1) 49 Vice President and Regional Director, Nevada
Operations
Jean-Michael Rendu(1) 51 Vice President, Technical Services
Timothy J. Schmitt 52 Vice President, Secretary and Assistant General
Counsel
Patricia A. Flanagan 36 Treasurer and Assistant Secretary
---------------
(1) Elected officer of NGC only.
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 executive officer of Newmont also serves as an
executive officer of NGC.
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Mr. Cambre was elected Chairman of Newmont on November 16, 1994 (effective
January 1, 1995), President on June 1, 1994 and Chief Executive Officer on
September 23, 1993 (effective November 1, 1993). He served as Vice Chairman of
Newmont from November 1, 1993 through December 31, 1994. 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
Chairman, President and Chief Executive 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. Kurlander was elected Senior Vice President, Administration of Newmont
on March 16, 1994 (effective April 1, 1994). Previously, he served as Senior
Vice President, Public Affairs and Government Affairs, for Nabisco International
Inc. of RJR Nabisco, Inc., a consumer products company, since 1992. Prior to
that he managed worldwide communications, state government affairs and worldwide
security functions for American Express Company, a financial services company.
He is also Senior Vice President, Administration of NGC.
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 NGC on April
24, 1991 (effective March 11, 1991). Previously, he held various environmental
positions with Newmont and NGC.
Mr. Brunk was elected Vice President, Business Development of NGC on May
14, 1994. He had served as Vice President, Project Development of Newmont from
April 24, 1991 (effective March 11, 1991) through May 13 1994. Previously, he
was 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 NGC on May 14, 1994. He was
designated Vice President, Project Development and Regional Director,
Commonwealth of Independent States, in 1995. Previously, he served as Vice
President, Project Development and Metallurgical Research since May 14, 1994.
Prior to that he held various senior metallurgical research and environmental
positions with Newmont and NGC for more than five years.
Ms. Donnelly was elected Vice President, Government Relations of NGC on
June 12, 1990. Prior to that date, she held various other government relations
positions with Newmont and NGC.
Mr. Dow was elected a Vice President of NGC on May 18, 1994 and
subsequently was designated Regional Director, Indonesia and Southeast Asia.
Previously he held various senior exploration positions with Newmont and its
subsidiaries for more than five years.
Mr. Farmar was elected a Vice President of Newmont on December 16, 1992 and
Controller on October 30, 1991. He had served as Assistant Controller from
January 28, 1989 through October 29, 1991. Previously, he served as Controller
of Petro-Lewis Corporation, an independent oil and gas producer. He is also Vice
President and Controller of NGC.
Mr. Hamer was designated Vice President, Indonesian Projects, of NGC on
January 1, 1994. Previously, he served as Vice President, Project Development
from January 1, 1993 through December 31, 1993. He also served as Vice President
and General Manager from October 30, 1991 to December 31, 1992 and as Vice
President and Resident Manager since March 11, 1991 and as Vice President,
Operations from October 31, 1988 to March 10, 1991.
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Mr. Harris was elected a Vice President, of NGC on May 18, 1994 and
subsequently was designated Regional Director, South America. Previously he held
various senior metallurgical and operations positions with NGC and NMC for more
than five years.
Mr. Karras has served as Vice President, Taxes of Newmont since 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.
Mr. Krol has served as Vice President, Exploration of NGC since September
14, 1994. Previously, he served as Director of Foreign Exploration of NGC since
May 1992. Prior to that he served as Director of Metallurgical Services of NGC
since 1990.
Mr. Moran was elected Vice President, Engineering Services of NGC on
December 15, 1993 (effective January 17, 1994). Previously, he was employed by
BHP Minerals International Inc., a natural resources company, for more than five
years where he was responsible for the development and management of major
construction projects.
Mr. Morris was elected Vice President, Corporate Relations of NGC on March
16, 1994 (effective April 1, 1994). Previously, he served as Director of
Investor Relations and Corporate Communications for Inland Steel Industries from
1990 to 1993.
Mr. Mullin was designated Vice President and Regional Director, Nevada
Operations, on May 14, 1994. Previously, he served as Vice President and General
Manager of NGC since December 15, 1993. He also served as Acting General Manager
of NGC from January 1, 1993 to December 14, 1993. Prior to that he held various
senior operating positions with NGC.
Mr. Rendu was designated Vice President, Technical Services, on January 19,
1995. Previously, he served as Vice President, Information Systems since
November 26, 1991 and Vice President, Mine Engineering since March 11, 1991
having previously served as Vice President, Technical and Scientific Systems
since October 31, 1988.
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 served as 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 1994 and 1993 (restated where applicable for the stock split,
payable in the form of a stock dividend, declared on March 21, 1994) were:
1994 1993
------------------- -------------------
HIGH LOW HIGH LOW
------ ------ ------ ------
First quarter....................................... $48.07 $40.67 $36.00 $29.63
Second quarter...................................... $45.67 $37.63 $43.25 $32.13
Third quarter....................................... $46.75 $38.25 $47.13 $35.88
Fourth quarter...................................... $45.50 $33.88 $46.38 $37.63
On March 9, 1995, the approximate number of holders of record of Newmont's
common stock was 6,040.
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20
A dividend of $0.12 per share of common stock outstanding was declared in
each quarter of 1994 and 1993, or a total of $0.48 per share in each such year
(in 1993 restated for the stock split). The determination of the amount of
future dividends, however, will be made by Newmont'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.
ITEM 6. SELECTED FINANCIAL DATA
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE)
Sales................................ $ 597,370 $ 628,809 $ 605,897 $616,818 $674,894
========= ========= ========= ======== ========
Income from continuing operations
before cumulative effects of
changes in accounting principles... $ 76,121 $ 94,669 $ 90,621 $ 94,278 $168,497
Discontinued operations -- after
tax................................ -- -- -- -- 174,067
Cumulative effects of changes in
accounting principles after tax.... -- 38,470 (11,572) -- --
---------- ---------- ---------- -------- --------
Net income........................... $ 76,121 $ 133,139 $ 79,049 $ 94,278 $342,564
========= ========= ========= ======== ========
Earnings per share:
Income from continuing operations
before cumulative effects of
changes in accounting
principles...................... $ 0.70 $ 0.92 $ 1.04 $ 1.11 $ 1.99
Income from discontinued
operations -- after tax......... -- -- -- -- 2.06
Cumulative effects of changes in
accounting principles........... -- 0.45 (0.14) -- --
---------- ---------- ---------- -------- --------
Net income........................... $ 0.70 $ 1.37 $ 0.90 $ 1.11 $ 4.05
========= ========= ========= ======== ========
Dividends declared per common
share.............................. $ 0.48 $ 0.48 $ 0.48 $ 0.48 $ 0.48
========= ========= ========= ======== ========
AT DECEMBER 31:
Total assets......................... $1,656,657 $1,186,410 $1,236,304 $841,049 $963,596
Long-term debt, including
current portion.................... $ 593,634 $ 192,000 $ 265,689 $224,395 $414,228
Stockholders' equity................. $ 673,465 $ 629,832 $ 528,565(1) $201,448 $109,572
---------------
(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
Effective January 1, 1994, Newmont Gold Company ("NGC"), the principal
producing operating subsidiary of Newmont Mining Corporation ("Newmont"),
acquired essentially all of Newmont's assets (except for approximately 86
million shares of common stock of NGC held by Newmont) and assumed essentially
all of Newmont's liabilities which it did not already own or have an interest
in. In that the transaction occurred within Newmont's consolidated group, it had
minimal impact on consolidated results of operations, liquidity and capital
resources. Newmont's consolidated group is referred to hereafter as the
"Corporation."
19
21
RESULTS OF OPERATIONS
Before the cumulative effect of changes in accounting principles, the
Corporation earned $76.1 million, or $0.70 per share, $94.7 million, or $0.92
per share, and $90.6 million, or $1.04 per share, in 1994, 1993 and 1992,
respectively. The results for 1994 reflect an anticipated decline in production
from the Carlin Trend area of Nevada and $36.1 million in charges related to
environmental obligations, which were partially offset by a full year of equity
income from NGC's 38% interest in Minera Yanacocha, S.A. ("Minera Yanacocha"), a
Peruvian entity, and a $16.2 million tax benefit for the resolution of certain
tax issues associated with prior years. During 1993, the Corporation sold its
remaining interest in Newcrest Mining Limited for $67.0 million and recognized
an after-tax gain of $19.3 million ($29.6 million before-tax) or $0.22 per
share. The Corporation recognized the cumulative effect of a change in
accounting principle in 1993 and 1992. In 1993, the Corporation adopted
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," which resulted in a cumulative benefit of $38.5 million, or $0.45 per
share. Further information about this change in accounting for income taxes can
be found in Note 6 to Item 8 -- "Financial Statements and Supplementary Data."
In 1992, the Corporation adopted Statement of Financial Accounting Standards No.
106, "Employer's Accounting for Postretirement Benefits Other Than Pensions,"
which resulted in a cumulative charge of $11.6 million, or $0.14 per share.
Further information about this accounting change is included in Note 9 to Item
8 -- "Financial Statements and Supplementary Data."
The Corporation's sales revenues in the past three years are derived
entirely from gold production on the Carlin Trend. Carlin Trend gold production
was 1,555,300 ounces, 1,674,200 ounces and 1,598,900 ounces in 1994, 1993 and
1992, respectively. The average gold price per ounce received by the Corporation
in 1994 was $384. In 1993 and 1992, the Corporation hedged a portion of this
production through a gold loan and in 1992 it also used additional hedging
instruments. As a result, the Corporation realized per ounce prices on its
production of $376 and $379 in 1993 and 1992, respectively, compared to average
market per ounce prices of $361 and $344 for the same respective years. No
production in 1994 was hedged. However, in 1994, the Corporation entered into
several hedging transactions that begin in January 1996 and continue through
December 2000 for future production from its Minahasa property in Indonesia.
These transactions consist of forward sales of 125,000 ounces per year at an
average price of $454 an ounce, plus the Corporation will receive 40% of the
difference in the market price above the forward sale price. The Corporation may
enter into additional hedging transactions in the future.
The effects on sales revenues of the changes in the average annual gold
price received and annual production levels between years are reflected in the
following table (in thousands):
1994 VS. 1993 1993 VS. 1992
------------- -------------
Increase (decrease) in sales revenue due to:
Gold price............................................... $ 13,203 $(5,607)
Production............................................... (44,642) 28,519
------------- -------------
Total............................................ $ (31,439) $22,912
========== ==========
The anticipated decline in production from Carlin was the result of the
shutdown of three mills, the largest of which was closed to accommodate the
start-up of the new refractory ore treatment plant. This plant was expected to
reach full capacity in 1994, but because of a crack that occurred in a weld of a
riding ring of the double rotator mill and an electrostatic precipitator fire,
the plant has been able to operate at only partial capacity. The Corporation
expects the plant to reach full capacity by mid-1995. The Corporation has
targeted 1995 Carlin production at approximately 1.6 million ounces and expects
to maintain this level of production until the deeper and higher grade portions
of the Post deposit are mined, which is expected in 1997.
The Corporation expects that Carlin production will be augmented in 1995
with production from the Zarafshan-Newmont Joint Venture ("Zarafshan-Newmont"),
which is a 50%-50% joint venture between NGC and two Uzbekistan governmental
entities. Zarafshan-Newmont 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 $220 million, is anticipated to commence
production in mid-1995 at an annual rate of
20
22
450,000 ounces, or 225,000 ounces attributable to NGC's interest. Operating
costs, excluding depreciation, depletion and amortization ("DD&A"), are
anticipated to be about $150 per ounce.
The Corporation also expects that its production will be further augmented
beginning in early 1996 with production from the Minahasa project, located in
Indonesia. Construction of the project commenced in the third quarter of 1994
and is expected to cost $130 million. Production is expected to begin at initial
total annual rates of 140,000 ounces. Initial operating costs, excluding DD&A,
are anticipated to be $200 per ounce. NGC has an 80% interest in this project
and is the operator.
In addition to these two projects, NGC has a 38% interest in Minera
Yanacocha, a Peruvian entity, which a NGC subsidiary manages and which is
accounted for as an equity investment. Minera Yanacocha produced 304,600 ounces,
or 115,700 equity ounces in 1994 at operating costs, excluding DD&A, of $137 per
ounce of gold produced. Production commenced in August 1993 and 81,500 ounces,
or approximately 31,000 equity ounces were produced at operating costs,
excluding DD&A, of $151 per ounce. Production is expected to increase to 450,000
ounces, or 171,000 equity ounces in 1995 as a second deposit is mined for the
full year. Operating costs per ounce are expected to increase slightly in 1995
primarily due to mining lower grade and harder to process ore. Nevertheless,
equity income is expected to increase in 1995 due to Minera Yanacocha's rising
production.
As with sales revenues, costs applicable to sales and DD&A for the last
three years are almost entirely attributable to the Carlin operations. Costs
applicable to sales consist primarily of production costs and royalties, and on
a per ounce of production basis were as follows for the last three years:
1994 1993 1992
---- ---- ----
Production costs.............................................. $179 $165 $162
Royalties..................................................... 25 28 29
Other......................................................... 6 6 7
---- ---- ----
Total............................................... $210 $199 $198
==== ==== ====
Production costs consist principally of charges for mining ore and waste
associated with current period production and processing ore through milling and
leaching facilities. Total production costs increased slightly in 1994 to $277.8
million from $275.0 million in 1993 despite lower gold production which resulted
in a $14 increase in per ounce costs. This increase is the result of higher
milling and leaching costs incurred during 1994 as the refractory ore treatment
plant began operations at less than full capacity, as well as processing ore
that is mined from deeper areas of the open-pit mines, which is more difficult
to process. However, these cost increases were substantially offset by lower
mining costs which resulted from a decrease in tons mined. The 1993 production
costs increased over 1992 costs of $256.9 million due primarily to increased
tons mined and processed. Tons mined, excluding tons attributable to capitalized
mining costs discussed below, were 171 million, 190 million and 147 million in
1994, 1993 and 1992, respectively.
In addition to the production costs expensed, NGC is capitalizing a portion
of mining costs associated with its Post deposit. This deposit is being mined
under a joint mining agreement signed in December 1992 between 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 two years, the mining costs are being capitalized and will be matched
against the revenue from the ounces when they are produced. Such costs were
$33.2 million, $23.6 million and $5.2 million in 1994, 1993 and 1992,
respectively. These capitalized costs are expected to increase in 1995 due to
elevated mining rates for this deposit and capitalized costs for other deposits
NGC will begin mining that have diverse waste-to-ore ratios.
Royalty costs were $38.7 million in 1994, $47.6 million in 1993 and $46.6
million in 1992. The decrease between 1994 and 1993 is due to lower production
from royalty burdened ore, which reduced royalty costs by $11.8 million,
partially offset by an increase in the average gold price which increased
royalties by $2.9 million.
21
23
The increase in royalty costs in 1993 from 1992 was not significant. Royalty
costs are expected to increase in 1995 due to processing more royalty burdened
ore.
Costs applicable to sales per ounce remained fairly constant between 1992
and 1993, but increased in 1994 due to treating more difficult to process ores.
These per ounce costs for Carlin production are expected to increase in the
early part of 1995, then decline as the refractory ore treatment plant, which
treats higher grade ores, achieves full operation, resulting in a slightly
higher per ounce cost for 1995 over 1994. On a consolidated basis, the
Corporation's costs applicable to sales per ounce should be favorably impacted
as production from Zarafshan-Newmont begins.
DD&A was $91.1 million, $110.0 million and $98.8 million in 1994, 1993 and
1992, respectively. The decrease between 1994 and 1993 is primarily due to lower
depreciation attributable to the mills associated with Carlin operations, as
three were shutdown during the year. The increase between 1993 and 1992 was
primarily due to a higher level of property, plant and equipment in service.
With the refractory ore treatment plant reaching full capacity, DD&A is expected
to increase in 1995.
Exploration expenses were $69.2 million for 1994 compared to $52.7 million
in 1993 and $52.0 million in 1992. The increase in exploration expense in 1994
over the 1993 amount reflects an increase in exploration efforts primarily in
Indonesia and South America. Exploration expense is expected to decline in 1995.
In 1992, the Corporation acquired the Grassy Mountain project in Oregon for
$30.0 million. The Corporation had included in its reserve figures 996,000
contained ounces of reserves related to this project. Work was halted on this
project for most of 1994 when a referendum was placed on the Oregon ballot
which, if passed, would have effectively prevented open-pit mining in the state.
The referendum was defeated in November 1994 and the Corporation resumed studies
to determine how the deposit can be economically mined. As a result of
additional work, the current interpretation of the ore body is that gold is in
high grade pods rather than disseminated. This type of ore body, if confirmed,
would likely result in an underground project. However, given the state of the
study at year end 1994, the ore body no longer meets the standard to be
classified as a proven and probable reserve. At December 31, 1994, $33.8 million
of costs were capitalized on the Corporation's balance sheet related to this
project. In addition, at the end of 1994, the Corporation had $19.0 million of
costs capitalized related to the Ivanhoe Joint Venture exploration property, on
which exploration results have thus far been disappointing.
General and administrative expense ("G&A") was $41.9 million in 1994
compared to $35.8 million in 1993 and $35.4 million in 1992. The increase in the
G&A in 1994 reflects the increased international focus of the Corporation's
operations in that the Corporation provides extensive management oversight and
technical expertise to its overseas operations. The 1994 level of G&A expense is
expected to continue in 1995.
Interest expense was $29.5 million for 1994. Of this amount, $19.7 million
was capitalized as a result of major construction projects at the Carlin
operations, primarily the refractory ore treatment plant, as well as the
processing plant in Uzbekistan and mine development in Indonesia. The 1993
interest expense was $20.9 million with capitalized interest of $8.5 million and
the 1992 interest expense was $17.0 million with capitalized interest of $2.4
million. The increase in the 1994 interest expense over the 1993 and 1992
amounts is the result of higher debt balances in 1994. Interest expense is
expected to increase in 1995 due to higher average debt balances, and
capitalized interest is expected to decrease due to the completion of the
refractory ore treatment plant which occurred at the end of 1994 and completion
of the Zarafshan-Newmont project which is expected to occur by mid-1995.
Dividends, interest and other income was $22.3 million for 1994, $20.0
million for 1993 and $18.5 million for 1992. The 1994 amount reflects $9.2
million for business interruption insurance recorded for the delayed start-up of
the refractory ore treatment plant offset by lower interest income due to lower
cash balances throughout 1994 compared to 1993 and 1992 and lower dividends from
investments in 1994.
Other expenses were $42.7 million, $14.2 million and $3.2 million in 1994,
1993 and 1992, respectively. Other expenses reflect a charge of $36.1 million
and $6.0 million in 1994 and 1993, respectively, related to environmental
obligations associated with former mining activities discussed in Note 14 to
Item 8 -- "Financial Statements and Supplementary Data." Included in the 1994
amount is a valuation allowance of
22
24
$20.0 million that was made against receivables from insurance companies for
recoveries related to such environmental obligations. The Corporation recorded
the valuation allowance after discussions with new lead counsel regarding its
review of the litigation with the insurance companies and due to the absence of
expected settlement discussions. The valuation allowance resulted in a net
receivable balance from insurance companies of approximately $17 million at
December 31, 1994. Subsequent to December 31, 1994, settlement in the insurance
litigation was reached enabling the Corporation to realize the receivable.
Settlement discussions continue with respect to some of the litigation. The
Corporation intends to vigorously pursue its claims under the remaining
litigation and believes that it is reasonably possible that additional amounts
will be recovered. Since the actual cash payments for the environmental
obligations are expected to occur over a number of years, such cash requirements
are not expected to have a significant negative impact on the Corporation's
liquidity. The Corporation made payments of $14.5 million, $12.6 million and
$13.7 million in 1994, 1993 and 1992, respectively, with respect to these
environmental obligations and expects to pay approximately $16 million of such
costs in 1995. For these liabilities, $64.3 million had been accrued at December
31, 1994. 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 65% greater or 15% lower than the amount accrued at December 31, 1994.
Absent concurrent insurance recoveries, on-going cash payments will be funded
out of operating cash flows and/or borrowings. The Corporation continuously
monitors and reviews its environmental obligations, and although the Corporation
believes that it has adequately accrued for such costs, as additional facts
become known, additional provisions may be required. Other expenses in 1993 also
reflect $3.5 million of costs of the transaction with NGC discussed in Note 2 to
Item 8 -- "Financial Statements and Supplementary Data."
In 1994, the Corporation recognized an income tax benefit of $16.2 million
resulting from the resolution of certain tax issues associated with prior years.
This, in addition to the benefits of percentage depletion on significantly lower
pre-tax financial income, contributed to an overall effective tax rate benefit
for 1994 compared to effective tax rate charges recognized in 1993 and 1992.
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 1994, the Corporation's cash outlays included $402.0 million for
capital expenditures, of which $178.0 was for the refractory ore treatment
plant, $62.6 million was for Zarafshan-Newmont and $24.6 million was for the
Minahasa projects. In addition, $57.3 million in common and preferred stock
dividends were paid. These outlays were funded through $401.6 million of net
borrowings (of which $349.1 million was from the sale and leaseback of the
refractory ore treatment plant) and $137.1 million of cash provided by operating
activities.
Approximately $300 million is expected to be spent on capital projects in
1995. Carlin Trend expenditures of approximately $170 million will represent
increases in capitalized mining costs and underground development. Capital funds
of approximately $25 million and $90 million will also be required for the
completion of the Zarafshan-Newmont and Minahasa projects, respectively.
Cash on hand at December 31, 1994 of $160.6 million, operating cash flow,
unused bank credit lines of $400 million and expected additional borrowings by
Zarafshan-Newmont ($15 million to the Corporation's share) will be used to fund
the Corporation's capital investment programs and other cash requirements.
Newmont and NGC have also filed shelf registration statements with the
Securities and Exchange Commission covering the issuance of $300 million in
equity securities and $150 million in non-convertible debt securities,
respectively. There are no present plans to issue these securities. The
Corporation expects to fund maturities of its debt through operating cash flow
and/or by refinancing the debt as it becomes due.
Of the Corporation's $402.0 million in capital expenditures in 1994, it is
estimated that approximately $94 million was required to comply with
environmental regulations. The Corporation estimates that in 1995 approximately
$25 million to $30 million will be spent for capital expenditures to comply with
environmental regulations. A significant portion of these 1994 expenditures are
related to the refractory ore treatment plant.
23
25
After 1995, environmental capital expenditures are not expected to be more than
approximately $20 million, annually. The ongoing costs to comply with
environmental regulations are not a significant portion of the Corporation's
operating costs. The Corporation provides for future reclamation and mine
closure costs on a unit-of-production basis. The annual accrual for costs
associated with current operations 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.
Accounts receivable increased by $30.2 million between December 31, 1993
and December 31, 1994 primarily as a result of reclassifying $16.7 million from
non-current other assets for insurance recoveries related to environmental
obligations associated with former mining activities and recording a receivable
for business interruption insurance related to start-up problems of the
refractory ore treatment plant discussed in "Results of Operations." Collections
on both receivables were made in early 1995. Other current assets increased
between December 31, 1993 and December 31, 1994 by $16.7 million due primarily
to increases in prepaid taxes.
Accounts payable increased between December 31, 1993 and December 31, 1994
by $14.8 million primarily due to timing of vendor payments. Other accrued
liabilities increased over the same time period due primarily to a $16.5 million
increase in accruals for exploration and capital projects in Indonesia and an
increase of $8.8 million for current expenditures for remediation work related
to former mining activities.
The decrease in minority interest in subsidiaries is primarily a result of
the transaction with NGC discussed in Note 2 to Item 8 -- "Financial Statements
and Supplementary Data." In that approximately $203 million of net liabilities
were assumed by NGC, this decrease was partially offset by the minority interest
in NGC increasing from 9.9% to 10.8%. The net decrease was offset by a like
increase to retained earnings.
24
26
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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,
1994 and 1993, 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, 1994. 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 financial statements referred to above present fairly,
in all material respects, the financial position of Newmont Mining Corporation
and subsidiaries as of December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994 in conformity with generally accepted accounting principles.
As discussed in Note 6 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 9 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 LLP
ARTHUR ANDERSEN LLP
Denver, Colorado,
March 14, 1995.
25
27
NEWMONT MINING CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(IN THOUSANDS, EXCEPT PER SHARE)
YEARS ENDED DECEMBER 31,
----------------------------------
1994 1993 1992
-------- -------- --------
Sales and other income
Sales.................................................... $597,370 $628,809 $605,897
Dividends, interest and other............................ 22,316 19,976 18,461
Gain on disposition of securities........................ -- 29,607 --
-------- -------- --------
619,686 678,392 624,358
-------- -------- --------
Costs and expenses
Costs applicable to sales................................ 326,385 333,541 316,180
Depreciation, depletion and amortization................. 91,115 110,000 98,760
Exploration.............................................. 69,151 52,694 51,993
General and administrative............................... 41,892 35,849 35,393
Interest, net of amounts capitalized..................... 9,823 12,393 14,555
Other.................................................... 42,655 14,230 3,238
-------- -------- --------
581,021 558,707 520,119
-------- -------- --------
Equity in income (loss) of affiliated companies............ 15,395 5,001 (2,821)
-------- -------- --------
Pretax income before cumulative effect of changes in
accounting principles.................................... 54,060 124,686 101,418
Income tax benefit (provision)............................. 29,334 (18,565) (2,778)
Minority interest in income of Newmont Gold Company........ 7,273 11,452 8,019
-------- -------- --------
Income before cumulative effect of changes in
accounting principles.................................... 76,121 94,669 90,621
Cumulative effect of changes in accounting principles, net
of income tax benefit of $5,962 in 1992.................. -- 38,470 (11,572)
-------- -------- --------
Net income................................................. 76,121 133,139 79,049
Preferred stock dividends.................................. 15,813 15,910 1,747
-------- -------- --------
Net income applicable to common shares..................... $ 60,308 $117,229 $ 77,302
======== ======== ========
Income (loss) per common share:
Before cumulative effect of changes in accounting
principles............................................ $ 0.70 $ 0.92 $ 1.04
Cumulative effect of changes in accounting principles.... -- 0.45 (0.14)
-------- -------- --------
Net income per common share.............................. $ 0.70 $ 1.37 $ 0.90
======== ======== ========
The accompanying notes are an integral part of these statements.
26
28
NEWMONT MINING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE)
AT DECEMBER 31,
-------------------------
1994 1993
---------- ----------
ASSETS
Cash and cash equivalents........................................... $ 160,637 $ 69,750
Short-term investments.............................................. 13,438 18,709
Accounts receivable................................................. 37,597 7,416
Inventories......................................................... 130,931 122,246
Other............................................................... 27,531 10,843
---------- ----------
Current assets.................................................... 370,134 228,964
Property, plant and mine development, net........................... 1,119,286 794,530
Other............................................................... 167,237 162,916
---------- ----------
Total assets.............................................. $1,656,657 $1,186,410
========= =========
LIABILITIES
Short-term debt..................................................... $ 15,739 $ 15,739
Accounts payable.................................................... 32,723 17,937
Other accrued liabilities........................................... 104,753 76,358
---------- ----------
Current liabilities............................................... 153,215 110,034
Long-term debt...................................................... 593,634 192,000
Reclamation and remediation liabilities............................. 66,760 71,093
Other long-term liabilities......................................... 90,097 92,040
---------- ----------
Total liabilities......................................... 903,706 465,167
---------- ----------
Minority interest in Newmont Gold Company........................... 79,486 91,411
---------- ----------
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; 86,804
and 86,698 issued, less 724 and 902 treasury shares,
respectively...................................................... 137,728 137,274
Capital in excess of par value...................................... 302,800 293,031
Retained earnings................................................... 218,562 185,152
---------- ----------
Total stockholders' equity................................ 673,465 629,832
---------- ----------
Total liabilities and stockholders' equity................ $1,656,657 $1,186,410
========= =========
The accompanying notes are an integral part of these statements.
27
29
NEWMONT MINING CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CHANGES
IN STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT PER SHARE)
CAPITAL
IN
EXCESS
PREFERRED STOCK COMMON STOCK OF
---------------- ----------------- PAR RETAINED
SHARES AMOUNT SHARES AMOUNT VALUE EARNINGS
------ ------- ------ -------- -------- --------
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
Transaction with NGC (Note 2).............. -- -- -- -- -- 14,069
Stock options exercised.................... -- -- 106 169 3,065 --
Common stock issued from treasury,
primarily for stock options exercised... -- -- 178 285 6,704 --
Net income................................. -- -- -- -- -- 76,121
Common stock dividends -- $0.48 per
share................................... -- -- -- -- -- (41,452)
Preferred stock dividends -- $5.50 per
share................................... -- -- -- -- -- (15,813)
Minimum pension liability adjustment....... -- -- -- -- -- 835
Other...................................... -- -- -- -- -- (350)
------ ------- ------ -------- -------- --------
Balance at December 31, 1994................. 2,875 $14,375 86,080 $137,728 $302,800 $218,562
===== ======= ====== ======== ======== ========
The accompanying notes are an integral part of these statements.
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30
NEWMONT MINING CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(IN THOUSANDS)
YEARS ENDED DECEMBER 31,
-------------------------------------
1994 1993 1992
--------- --------- ---------
Operating activities
Net income............................................ $ 76,121 $ 133,139 $ 79,049
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization........... 91,115 110,000 98,760
Undistributed earnings of affiliates............... (14,553) (4,928) --
Minority interest, net of distributions............ 1,318 11,229 7,500
Deferred taxes..................................... (28,052) (65,774) (30,605)
Gain on securities................................. -- (29,607) --
Debt repayment at less than monetized amount....... -- (23,508) (26,039)
--------- --------- ---------
125,949 130,551 128,665
(Increase) decrease in operating assets:
Accounts receivable.............................. 9,970 (809) (6,533)
Inventories...................................... (13,336) (46,062) 14,105
Other assets..................................... (5,032) 1,407 (13,670)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses............ 24,868 (7,592) (16,933)
Other liabilities................................ (3,378) (19,571) 29,157
Other operating.................................... (1,950) (1,925) 3,510
--------- --------- ---------
Net cash provided by operating activities............... 137,091 55,999 138,301
--------- --------- ---------
Investing activities
Additions to property, plant and mine development..... (402,030) (235,314) (212,701)
Proceeds from sales of securities and maturities of
short-term investments............................. 13,888 88,189 18,264
Purchase of short-term investments.................... (8,617) (16,845) (19,664)
Non-capital investment in joint venture............... (14,675) (23,196) (1,887)
Other................................................. 10,262 10,653 6,492
--------- --------- ---------
Net cash used in investing activities................... (401,172) (176,513) (209,496)
--------- --------- ---------
Financing activities
Short-term borrowings................................. -- 4,798 28
Proceeds from long-term borrowings.................... 528,634 15,000 177,000
Repayments of long-term borrowings.................... (127,000) (88,689) (86,157)
Proceeds from issuance of common stock................ 10,599 26,104 13,488
Proceeds from issuance of preferred stock............. -- -- 279,811
Dividends paid on common stock........................ (41,452) (41,019) (40,816)
Dividends paid on preferred stock..................... (15,813) (16,954) --
--------- --------- ---------
Net cash provided by (used in) financing activities..... 354,968 (100,760) 343,354
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents.... 90,887 (221,274) 272,159
Cash and cash equivalents at beginning of year.......... 69,750 291,024 18,865
--------- --------- ---------
Cash and cash equivalents at end of year................ $ 160,637 $ 69,750 $ 291,024
========= ========= =========
See Note 13 for supplemental cash flow information.
The accompanying notes are an integral part of these statements.
29
31
NEWMONT MINING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(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"). The Corporation also includes its pro rata share of assets,
liabilities and operations for joint ventures in which it has an interest. All
significant intercompany balances and transactions have been eliminated. The
Corporation's principal subsidiary is Newmont Gold Company ("NGC"), which is
approximately 89% owned.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of all cash balances and highly liquid
investments with a 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.
INVESTMENTS
Effective January 1, 1994, the Corporation adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." There was no impact on the Corporation's financial position
as the related investments are considered to be classified as held to maturity.
Short-term investments are carried at cost, which approximates market, and
include Eurodollar government and corporate obligations rated AA or higher. At
December 31, 1994 and 1993, approximately $6.9 million and $8.0 million,
respectively, of such investments were secured by 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 and income from such investments is recorded when
dividends are paid.
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
twenty-one years.
Mineral exploration costs are expensed as incurred. When it has been
determined that a mineral property can be economically developed, the costs
incurred to develop such property, including costs to further delineate the ore
body and remove overburden to initially expose the ore body, are capitalized.
Such costs, and estimated future development costs, are amortized using a
unit-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.
30
32
NEWMONT MINING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Significant payments related to the acquisition of exploration interests
are capitalized. If a mineable ore body is discovered, such costs are amortized
using a unit-of-production method. If no mineable ore body is 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 certain of the Corporation's
deposits, mining costs for the deposits, 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 unit-of-production
method.
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 Corporation for the 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 Corporation for the
year.
GOLD 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 on 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
31
33
NEWMONT MINING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1994, 1993 and 1992. The weighted average number of shares used in the earnings
per share calculations were 86.1 million, 85.5 million and 85.0 million in 1994,
1993 and 1992, respectively.
RECLASSIFICATIONS
Certain amounts in prior years have been reclassified to conform to the
1994 presentation.
(2) TRANSACTION WITH NEWMONT GOLD COMPANY
Effective January 1, 1994, NGC acquired essentially all of the
Corporation's non-NGC assets and assumed essentially all of the Corporation's
non-NGC liabilities. As 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 result of the transaction is that the common
shareholders of both entities have interests in the same assets and liabilities.
Furthermore, the Corporation declared a 1.2481 shares to 1 share stock split on
March 21, 1994 which resulted in per share earnings of the two entities being
comparable. All relevant share and per share information reflects this split.
The transfer of assets, NGC common stock and liabilities to NGC was
recorded at historical cost since the transaction was between entities under
common control. As a result of the transaction, consolidated retained earnings
increased approximately $14 million and the minority interest in NGC decreased
by a like amount since net liabilities with a historical cost of approximately
$203 million were transferred to NGC, offset partially by the Corporation's
decrease in ownership of NGC.
(3) INVENTORIES
AT DECEMBER 31,
-----------------------
1994 1993
-------- --------
(IN THOUSANDS)
Current:
Ore and in-process inventories............................ $ 62,196 $ 55,874
Precious metals........................................... 34,536 38,090
Materials and supplies.................................... 31,533 25,907
Other..................................................... 2,666 2,375
-------- --------
$130,931 $122,246
======== ========
Non-current:
Ore-in-stockpiles (included in other assets).............. $ 33,051 $ 28,303
======== ========
(4) PROPERTY, PLANT AND MINE DEVELOPMENT
AT DECEMBER 31,
-------------------------
1994 1993
---------- ----------
(IN THOUSANDS)
Land and mining claims...................................... $ 70,884 $ 68,755
Buildings and equipment..................................... 1,212,738 784,071
Mine development............................................ 231,468 202,814
Construction-in-progress.................................... 145,608 232,693
---------- ----------
1,660,698 1,288,333
Accumulated depreciation, depletion and amortization........ (603,350) (522,556)
Capitalized mining costs.................................... 61,938 28,753
---------- ----------
$1,119,286 $ 794,530
========= =========
32
34
NEWMONT MINING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(5) OTHER ACCRUED LIABILITIES
AT DECEMBER 31,
-----------------------
1994 1993
-------- -------
(IN THOUSANDS)
Plant and equipment.......................................... $ 33,819 $20,340
Payroll and related benefits................................. 17,006 14,960
Reclamation and remediation.................................. 15,900 8,399
Other........................................................ 38,028 32,659
-------- -------
$104,753 $76,358
======== =======
(6) 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 was to increase the Corporation's 1993 earnings
$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 as measured by the statutory rates in
effect as enacted.
The Corporation's deferred income tax assets include certain future tax
benefits such as net operating losses or tax credit carryforwards. The
Corporation must record a valuation allowance against any portion of those
deferred income tax assets which it believes it will more likely than not fail
to realize.
33
35
NEWMONT MINING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Worldwide components of the Corporation's resulting deferred income tax
(liabilities) and assets are as follows (in thousands):
AT DECEMBER 31,
---------------------
1994 1993
-------- --------
Deferred tax liabilities:
Accelerated tax depreciation................................. $(45,165) $(40,940)
Capitalized interest......................................... (9,892) (2,095)
Mine development costs....................................... (8,444) (11,738)
Depletion of the cost of land and mining claims.............. (3,589) (4,278)
Other........................................................ (722) (3,734)
-------- --------
Gross deferred tax liabilities............................ (67,812) (62,785)
-------- --------
Deferred tax assets:
Investments in subsidiaries and affiliates not consolidated
for tax purposes.......................................... 47,603 38,511
Exploration costs............................................ 19,956 20,102
Alternative minimum tax credit carryforward.................. 19,616 1,286
Reclamation costs............................................ 11,353 6,282
Retiree benefit costs........................................ 8,857 7,774
Deferred gain on interest rate hedges........................ 3,798 --
Relocation/reorganization costs.............................. 3,407 4,302
Capitalized inventory costs.................................. 3,270 6,471
Other........................................................ 2,147 1,118
-------- --------
Gross deferred tax assets................................. 120,007 85,846
-------- --------
Valuation allowance for deferred tax assets.................. (8,857) (7,774)
-------- --------
Net deferred tax assets...................................... $ 43,338 $ 15,287
======== ========
Based upon its estimate of future operations and tax planning strategies,
the Corporation believes that it more likely than not will utilize $111.2
million of the $120.0 million of gross deferred income tax assets at December
31, 1994, reflecting a valuation allowance of $8.8 million and a net increase of
$1.1 million from December 31, 1993's valuation allowance.
The Corporation gives no outright assurance that it will generate
sufficient taxable income to fully realize the $111.2 million of gross deferred
income tax assets at December 31, 1994. Rather, the Corporation's future levels
of taxable income will depend, in part, upon gold prices, general economic
conditions and other factors beyond the Corporation's control.
The Corporation's pre-tax financial statement income (loss) before minority
interest in NGC and the cumulative effect of changes in accounting principles
consists of (in thousands):
YEARS ENDED DECEMBER 31,
----------------------------------
1994 1993 1992
-------- -------- --------
Domestic........................................... $ 68,880 $111,656 $117,554
Foreign............................................ (14,820) 13,030 (16,136)
-------- -------- --------
$ 54,060 $124,686 $101,418
======== ======== ========
34
36
NEWMONT MINING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Corporation's provisions (benefits) for income taxes before the
cumulative effect of changes in accounting principles consist of (in thousands):
YEARS ENDED DECEMBER 31,
----------------------------------
1994 1993 1992
-------- -------- --------
(SFAS 109) (APB 11)
--------------------- --------
Current:
Domestic......................................... $ 3,660 $ 43,084 $ 26,959
Foreign.......................................... 586 1,369 462
-------- -------- --------
4,246 44,453 27,421
-------- -------- --------
Deferred:
Domestic......................................... (33,580) (26,200) (24,643)
Foreign.......................................... -- -- --
Adjustment in net deferred tax liabilities for
change in tax rates........................... -- 312 --
-------- -------- --------
(33,580) (25,888) (24,643)
-------- -------- --------
$(29,334) $ 18,565 $ 2,778
======== ======== ========
In accordance with APB 11, the Corporation's deferred income tax provisions
(benefits) for 1992, before the cumulative effect of a change in accounting
principle, consisted of (in thousands):
YEAR ENDED
DECEMBER 31,
1992
------------
Accelerated tax depreciation............................................ $(15,037)
Mine development and exploration costs.................................. (13,615)
Capitalized inventory costs............................................. 2,136
Relocation costs........................................................ 863
Other................................................................... 1,010
------------
$(24,643)
==========
On August 10, 1993, President Clinton signed into law the Revenue
Reconciliation Act of 1993, raising the U.S. federal corporate income tax rate
from 34% to 35% (retroactive to January 1, 1993). The Corporation's resulting
provisions (benefits) 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,
----------------------------------
1994 1993 1992
-------- -------- --------
(SFAS 109) (APB 11)
--------------------- --------
U.S. corporate income tax at statutory rate........ $ 18,921 $ 43,521 $ 34,333
Percentage depletion............................... (27,437) (26,191) (22,677)
Resolution of tax issues associated with prior
years............................................ (16,250) -- --
Foreign tax credits................................ (4,421) -- (157)
Dividends received from and undistributed income
(losses) of subsidiaries and affiliates.......... -- 754 (8,820)
Non-taxable portion of dividends received from
domestic corporations............................ (564) (474) (384)
Other.............................................. 417 955 483
-------- -------- --------
$(29,334) $ 18,565 $ 2,778
======== ======== ========
35
37
NEWMONT MINING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Corporation's prepaid income taxes were $9.1 million at December 31,
1994. The Corporation's other long-term liabilities included $23.7 million and
$36.8 million of income taxes payable at December 31, 1994 and 1993,
respectively.
(7) DEBT
LONG-TERM DEBT
Long-term debt consists of (in thousands):
AT DECEMBER 31,
---------------------
1994 1993
-------- --------
Sale-leaseback of refractory ore treatment plant............... $349,134 $ --
8 5/8% notes................................................... 150,000 150,000
Medium-term notes.............................................. 42,000 42,000
Project financing.............................................. 52,500 --
-------- --------
$593,634 $192,000
======== ========
Scheduled minimum long-term debt repayments are zero in 1995, $14.0 million
in 1996, $19.3 million in 1997, $25.0 million in 1998 and $17.9 million in 1999.
Actual payments may be greater due to actual operating cash flows realized.
Sale-leaseback of the Refractory Ore Treatment Plant
In September 1994, the Corporation entered into a sale and leaseback
agreement for its refractory ore treatment plant located in Carlin, Nevada for
$349.1 million. The transaction has been accounted for as debt for financial
statement purposes, with the cost of the refractory ore treatment plant
recognized as an asset and depreciated. The lease is for 21 years and the
aggregate future minimum lease payments, which include interest, as of December
31, 1994 were $667.9 million. These payments begin in January 1996 and are $29.7
million annually in 1996 through 1999. Principal payments are included in these
amounts beginning in 1998.
The lease has purchase options during and at the end of the lease at
predetermined prices.
In connection with this transaction, the Corporation entered into certain
interest rate contracts to hedge the interest cost of the financing. These
contracts were settled for a gain of $11.0 million which will be recognized as a
reduction of interest expense over the term of the lease. As a result of this
gain, the effective interest rate is 6.15%.
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, 1994 and 1993, this debt was estimated to have a
fair value of $151.5 million and $170.7 million, respectively.
Medium-term Notes
Beginning in May 1992, the Corporation began issuing notes under its $150
million medium-term notes program. Notes totalling $42.0 million, with a
weighted average interest rate of 7.7% maturing on various dates ranging from
mid-1999 to late 2004 were outstanding as of December 31, 1994 and 1993. Using
the interest rates prevailing on similar instruments at December 31, 1994 and
1993, this debt was estimated to have a fair value of $40.4 million and $45.6
million at those respective dates.
36
38
NEWMONT MINING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Project Financing Facility
The Corporation, through a wholly-owned subsidiary, is a 50% participant in
the Zarafshan-Newmont Joint Venture ("Zarafshan-Newmont"), in the Republic of
Uzbekistan. The other 50% participants are two entities of the Uzbekistan
government. Zarafshan-Newmont was established to construct and operate a
leaching facility to produce gold from low-grade ore previously mined and
stockpiled at the Muruntau mine in the Republic of Uzbekistan.
Zarafshan-Newmont has secured $105.0 million of project financing from a
consortium of banks. The loan is payable out of the proceeds of the project,
beginning the earlier of three months after the first interest payment date
after completion tests are satisfied 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 three month London Interbank Offered Rate prior to
satisfaction of project completion tests and 3.75 percentage points over the
three month London Interbank Offered Rate after satisfaction of project
completion tests. The weighted average interest rate for 1994 was 6.9% and the
interest rate at December 31, 1994 was 7.8%. The full amount under the facility
had been drawn down in 1994 and is outstanding as of December 31, 1994. The
Corporation expects that the facility will be amended to allow Zarafshan-Newmont
to draw down an additional $30 million under the facility in 1995.
The Corporation has guaranteed one-half of the payment of any amounts due
under such loan until the requirements of the project completion tests have been
satisfied, at which time the loan will become non-recourse debt. Such completion
tests must be satisfied no later than October 1996. The Corporation has obtained
political risk insurance coverage and loan guarantee.
Revolving Credit Facility
The Corporation has a $400.0 million revolving credit facility with a
consortium of banks. The facility expires in April 1998. No amounts were
outstanding under the facility as of December 31, 1994 or December 31, 1993.
Interest rates are variable and adjust subject to changes in the Corporation's
long-term debt ratings and to usage of the facility in terms of borrowings as a
percentage of commitments. Currently, the Corporation's interest rate is the
lenders' base rate plus 0.25%. The Corporation has the option to fix the rate
for up to six months. There is an annual facility fee which will also adjust
subject to the Corporation's debt ratings. This fee is presently 0.15% of the
lenders' total commitment.
The revolving credit facility contains covenants that limit consolidated
indebtedness, as defined, to 67% of total capitalization; require minimum net
worth, as defined, of $250 million in 1994, which then increases $25.0 million
annually through 1997; and require an interest coverage ratio, as defined, of
not less than 2.5 to 1.
SHORT-TERM DEBT
All short-term debt at December 31, 1994 and 1993 consisted of bank debt.
The Corporation currently has unsecured demand bank lines of credit aggregating
$16.0 million, of which $15.7 million was outstanding at December 31, 1994 and
1993. These facilities bear interest at customary short-term rates for borrowers
with similar credit ratings. The interest rates on this short-term bank debt had
a weighted average of 6.5% and 6.0% in 1994 and 1993, respectively, and were
8.5% and 6.0% at December 31, 1994 and 1993, respectively.
CAPITALIZED INTEREST
Capitalized interest was $19.7 million, $8.5 million and $2.4 million in
1994, 1993 and 1992, respectively.
37
39
NEWMONT MINING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(8) 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" in this
note) 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 $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.
38
40
NEWMONT MINING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
(9) 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, 1994, 996,053 shares were
available for future grants under the Corporation's stock option plans.
In 1994, 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 1994, 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 period of one to five
years and are exercisable over a ten year period. At December 31, 1994, 846,909
of these options were outstanding.
39
41
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, 1994:
1994 1993 1992
------------------------ ------------------------ ------------------------
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.............. 2,055,087 $27.20-56.09 2,418,991 $27.20-56.09 1,711,900 $27.20-38.66
Granted....................................... 476,703 $39.50-56.09 634,192 $37.56-56.09 1,256,524 $29.55-56.09
Exercised..................................... (276,894) $27.20-38.97 (758,533) $27.20-40.06 (444,588) $27.20-38.66
Canceled...................................... (77,350) $27.20-45.83 (239,563) $27.20-56.09 (104,845) $28.24-38.66
--------- --------- ---------
Outstanding at end of year.................... 2,177,546 $27.20-56.09 2,055,087 $27.20-56.09 2,418,991 $27.20-56.09
======== ======== ========
At December 31, 1994, 1,007,998 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 employees. 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. The vesting period
is five years of service for each 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).
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 $1.9
million and $5.0 million (which approximated market) at December 31, 1994 and
1993, 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 qualified 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,
-------------------------------
1994 1993 1992
------- ------- -------
Service cost.......................................... $ 3,070 $ 2,854 $ 2,809
Interest cost on projected benefit obligation......... 4,633 5,076 4,741
Return on assets...................................... (5,370) (4,993) (5,049)
Amortization of unrecognized prior service cost and
net accumulated losses less amortization of net
transition asset.................................... 211 254 167
------- ------- -------
Pension expense....................................... $ 2,544 $ 3,191 $ 2,668
======= ======= =======
40
42
NEWMONT MINING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following tables set forth the funded status of the Corporation's
pension plans and the amounts recognized in the Corporation's consolidated
balance sheets at December 31, 1994 and 1993, respectively (in thousands):
AT DECEMBER 31, 1994
-------------------------------------
SALARY HOURLY
PENSION PENSION SUPPLEMENTAL
PLAN PLAN PENSION PLAN
-------- ------- ------------
Actuarial present value of benefit obligations:
Accumulated benefit obligation --
Vested benefits...................................... $(46,831) $(4,094) $ (945)
Non-vested benefits.................................. (1,650) (1,167) (26)
-------- ------- ------------
(48,481) (5,261) (971)
Effect of future salary increases....................... (3,399) -- (10)
-------- ------- ------------
Projected benefit obligation.............................. (51,880) (5,261) (981)
Plan assets at fair value................................. 60,221 5,044 --
-------- ------- ------------
Plan assets greater (less) than projected benefit
obligation.............................................. 8,341 (217) (981)
Unrecognized prior service cost........................... (590) 141 610
Unrecognized net (gain) loss.............................. (2,558) (419) 4,285
Unrecognized net transition (asset) liability............. (2,680) (78) 2,715
Adjustment required to recognize minimum liability........ -- -- (7,600)
-------- ------- ------------
Net pension asset (liability)............................. $ 2,513 $ (573) $ (971)
======== ======= ==========
AT DECEMBER 31, 1993
-------------------------------------
SALARY HOURLY
PENSION PENSION SUPPLEMENTAL
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)
======== ======= ==========
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 1994, 1993 and 1992. 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
$2.5 million, $3.7 million and $2.7 million in stockholders' equity, which is
net of related deferred income tax benefits, for 1994, 1993 and 1992,
respectively.
41
43
NEWMONT MINING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In measuring the projected benefit obligation for the plans, the following
actuarial assumptions were used:
AT DECEMBER
31,
-------------
1994 1993
---- ----
Weighted average discount rate........................................ 8.5% 7.5%
Rate of increase in future compensation (applicable only to salaried
plans).............................................................. 4.0% 4.0%
The weighted average expected long-term rate of return on plan assets was
assumed to be 8.25% for 1994, 8.25% for 1993 and 9.25% for 1992.
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 retirement commences.
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 1994, 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,
----------------------------
1994 1993 1992
------ ------ ------
Service cost............................................. $1,846 $1,575 $1,410
Interest cost............................................ 1,642 1,602 1,359
------ ------ ------
Expense for postretirement benefits other than
pensions............................................... $3,488 $3,177 $2,769
====== ====== ======
42
44
NEWMONT MINING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the components of the liability for the
Corporation's plans for postretirement benefits other than pensions recognized
in its balance sheet (in thousands):
YEARS ENDED
DECEMBER 31,
-------------------
1994 1993
------- -------
Actuarial present value of accumulated benefit obligation:
Retirees....................................................... $10,296 $11,833
Other fully eligible plan participants......................... 1,556 2,128
Other active plan participants................................. 9,659 10,261
------- -------
Total APBO............................................. 21,511 24,222
Unrecognized net gain (loss)................................... 4,072 (1,619)
------- -------
Accrued liability for postretirement benefits other than
pensions....................................................... $25,583 $22,603
======= =======
At December 31, 1994 and 1993, $3.0 million and $3.4 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 8.5% and 7.5% were used in calculating
the APBO at December 31, 1994 and 1993, respectively. The assumed health care
cost trend rates to measure the expected cost of benefits at December 31, 1994
start at a 10% annual increase for coverage before the age of 65 and a 9% 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 and the APBO for 1994 by
approximately 22%.
SAVINGS PLAN
The Corporation has two qualified defined contribution savings plans, one
which covers salaried employees and the other which covers substantially all
hourly 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
of up to 6% and 4% of base salary for the salaried and hourly plans,
respectively.
The Corporation's matching contributions to such plans were $3.3 million,
$2.4 million and $2.3 million in 1994, 1993 and 1992, respectively.
(10) OTHER EXPENSE
The Corporation is involved in several matters concerning environmental
obligations primarily associated with former mining activities, as discussed in
Note 14. Included in other expenses for 1994 and 1993 are provisions of $36.1
million and $6 million, respectively, related to these matters.
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 2 for additional
information about this transaction. Costs related to the transaction of $0.6
million and $3.5 million were expensed in 1994 and 1993, respectively. Also
during 1994, the Corporation incurred
43
45
NEWMONT MINING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
$4.1 million of costs associated with defeating a referendum placed on the
Oregon ballot which would have effectively prevented open pit mining.
The Corporation expensed $0.7 million, $2.8 million and $3.8 million in
1994, 1993 and 1992, respectively, when it wrote down the carrying value of
certain assets.
(11) 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.
(12) 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 1994, there were three customers
which accounted for $125.2 million, $99.6 million and $88.5 million of total
sales, each of which represented more than 10% of total sales and together
accounted for 52% of the annual sales. In 1993, sales to three such major
customers accounted for $105.0 million, $97.3 million and $78.3 million, or 44%
of total sales. In 1992, sales to two such major customers accounted for $126.8
million and $65.3 million, or 31% of total sales.
Export sales were $497.2 million, $269.3 million and $267.5 million in
1994, 1993 and 1992, respectively.
(13) SUPPLEMENTAL CASH FLOW INFORMATION
Net cash provided by operating activities includes the following cash
payments (in thousands):
YEAR ENDED DECEMBER 31,
--------------------------------
1994 1993 1992
-------- -------- --------
Income taxes.......................................... $ 22,202 $ 62,873 $ 27,900
Interest, net of amounts capitalized.................. $ 6,975 $ 9,731 $ 9,636
Excluded from the statements of consolidated cash flows are the effects of
certain non-cash transactions. In 1994, the Corporation recognized an income tax
benefit of $16.2 million resulting from the resolution of certain tax issues
associated with prior years and in 1992 NGC exchanged $10.6 million of employee
housing property for $7.7 million of notes receivable and $2.9 million in cash.
(14) 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 are
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, $64.3 million and $62.7 million were accrued at December 31, 1994 and
1993, respectively, excluding $18.4 million and $16.8 million at December 31,
1994 and 1993, respectively, of reclamation costs relating to currently
producing mineral properties. The amounts are included in reclamation
liabilities and other current liabilities. The $64.3 million
44
46
NEWMONT MINING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
at December 31, 1994 includes charges of $16.1 million taken in 1994 as a result
of the Corporation revising its estimates of the costs associated with these
matters. 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 65% greater or 15% lower than the amount accrued at
December 31, 1994.
A discussion of the environmental obligations and related insurance
receivables associated with former mining activities as of December 31, 1994
follows.
Idarado Mining Company ("Idarado") -- 80.1% owned by NGC
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 settled natural resources damages,
past and future response costs and provided habitat enhancement work. In
addition, Idarado agreed in the consent decree to undertake specified
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 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
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 by NGC
In 1983, the State of Colorado 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 U. S. Environmental Protection Agency
("EPA") in 1986. The EPA is taking the lead role on cleanup issues. The
proceedings sought to compel the defendants to remediate the impacts of
pre-existing mining activities which the government agencies 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 lawsuits
have named 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.
The parties have entered into a consent decree with respect to Phase II
which apportions liabilities and responsibilities for the site among the various
parties. The EPA has not yet completed work to define the remedies for Phase II.
Accordingly, the Corporation cannot yet determine the full extent or cost of its
share of remedial action which will be required under Phase II. Moreover, in
addition to such action, the government agencies may seek to recover for damages
to natural resources.
Although the ultimate amount of Resurrection's and the Corporation's share
of 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, as previously discussed.
45
47
NEWMONT MINING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Dawn Mining Company ("Dawn") -- 51% owned by NGC
Dawn leased a currently inactive open-pit uranium mine on the Spokane
Indian Reservation in the State of Washington. The mine is subject to regulation
by agencies of the U. S. Department of Interior, the Bureau of Indian Affairs
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. The
Corporation's best estimate for the future costs related to these matters is
included in the gross liability for environmental matters, as previously
discussed. Dawn has developed and has received a license for a mill closure plan
which could potentially generate the necessary funds to reclaim the mine and the
mill. The plan, however, is currently being challenged administratively by third
parties.
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.
Insurance Receivables
Included in accounts receivable at December 31, 1994 was a net $16.7
million and in other non-current assets at December 31, 1993 and 1992 was a net
$42.2 million and $41.2 million, respectively, attributable to insurance
companies for both a portion of the costs previously expended and for estimated
future costs associated with environmental obligations covered by insurance
policies associated with former mining activities. The amount is net of a $20.0
million valuation allowance established in 1994.
Prior to 1993, three of the insurance companies commenced actions against
the Corporation seeking judgments that they had no liability. In the fall of
1993, the Corporation instituted a comprehensive lawsuit against its carriers.
In addition, in 1993, the Corporation designated new lead counsel for all the
insurance recovery actions.
Based on the views of prior lead counsel, the Corporation had believed that
significant progress in certain settlement discussions would have been achieved
by mid-summer 1994, but that expectation was not realized. The absence of such
anticipated progress in settlement discussions, as well as the Corporation's
discussions with new lead counsel for the insurance recovery actions regarding
its review of such actions, caused the Corporation in the second quarter of 1994
to provide a $20.0 million valuation allowance on its insurance receivables
resulting in the net balance outstanding at December 31, 1994. Subsequent to
December 31, 1994, settlement in the insurance litigation was reached enabling
the Corporation to realize the December 31, 1994 receivable. Settlement
discussions continue with respect to some of the litigation. The Corporation
will continue to vigorously pursue recovery in the remaining litigation and
believes that it is reasonably possible that additional amounts will be
recovered.
CLASS ACTION COMPLAINT
In March 1995, a class action complaint was filed against the Corporation
and others in which the plaintiffs allege exposure to certain allegedly
radioactive or otherwise hazardous waste materials produced at a ferroalloy
production plant in Guernsey County, Ohio. This plant was owned until 1987 by
Foote Mineral Company, a former subsidiary of the Corporation. The complaint
seeks $500 million of compensatory damages jointly and severally against all
defendants, $63 million in punitive damages against the Corporation, the
recovery of response costs and the establishment of a medical monitoring fund
under CERCLA.
46
48
NEWMONT MINING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Injunctive relief requiring defendants to remove the allegedly hazardous
materials from the property of the plaintiffs is also requested.
The Corporation is investigating this recently filed action and intends to
vigorously contest all alleged liability in this matter.
GUARANTEE OF THIRD PARTY INDEBTEDNESS
The Corporation guaranteed $35.7 million of Magma Copper Corporation'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.
GOLD PRICE HEDGING CONTRACTS
In 1994, the Corporation entered into several hedging transactions that
begin in January 1996 and continue through December 2000 for future production
from its Indonesian property, Minahasa. These transactions consist of forward
sales of 125,000 ounces per year at an average floor price of $454 an ounce,
plus the Corporation will receive 40% of the difference in the market price
above the forward sale price. The Corporation may enter into additional hedging
transactions in the future. No production in 1994 had been hedged.
GUARANTEE OF PROJECT FINANCING INDEBTEDNESS
NGC has a 38% interest in Minera Yanacocha S.A. ("Yanacocha"), a Peruvian
gold operation which commenced operations in 1993. During 1994, Yanacocha
secured project financing of $23.5 million from a consortium of banks. NGC
agreed to guarantee approximately $8.9 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 mid-1995.
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 the deposit. NGC incurred $39.0 million and $26.6 million of
such mining and dewatering costs in 1994 and 1993, respectively, and expects to
incur $50 million to $60 million annually for the next two years.
The Corporation has minimum royalty obligations on one of its producing
mines of 80,000 ounces of gold in 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 mine's
production will meet the minimum royalty requirements.
The Corporation is from time to time involved in various legal proceedings
of a character normally 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.
47
49
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):
1994
--------------------------------------------------------------------
THREE MONTHS ENDED
----------------------------------------------------- YEAR ENDED
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
--------- -------- ------------- ------------ ------------
Sales................................. $ 149.8 $139.3 $ 150.1 $158.2 $597.4
Gross profit(1)....................... $ 43.9 $ 45.3 $ 42.9 $ 47.8 $179.9
Net income............................ $ 21.6 $ 17.3(2) $ 20.4 $ 16.7 $ 76.1
Preferred stock dividends............. $ 4.0 $ 4.0 $ 3.9 $ 4.0 $ 15.8
Net income applicable to common
stock............................... $ 17.6 $ 13.4(2) $ 16.5 $ 12.7 $ 60.3
Net income per common share........... $ 0.20 $ 0.16(2) $ 0.19 $ 0.15 $ 0.70
Weighted average shares outstanding... 86.1 86.1 86.2 86.2 86.1
Dividends declared per common share... $ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.48
1993
--------------------------------------------------------------------
THREE MONTHS ENDED
----------------------------------------------------- YEAR ENDED
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
--------- -------- ------------- ------------ ------------
Sales................................. $ 136.2 $156.3 $ 176.7 $159.7 $628.8
Gross profit(1)....................... $ 32.6 $ 46.8 $ 60.4 $ 45.5 $185.3
Income before cumulative effect of
change in accounting principle...... $ 12.6 $ 39.5(3) $ 25.7 $ 16.9 $ 94.7
Cumulative effect of change in
accounting principle(4)............. $ 38.5 $ -- $ -- $ -- $ 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
Income per common share:
Income before cumulative effect of
change in accounting principle... $ 0.10 $ 0.42(3) $ 0.25 $ 0.15 $ 0.92
Cumulative effect of change in
accounting principle(4).......... $ 0.45 $ -- $ -- $ -- $ 0.45
Net income per common share......... $ 0.55 $ 0.42 $ 0.25 $ 0.15 $ 1.37
Weighted average shares outstanding... 85.1 85.4 85.7 85.9 85.5
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) Includes a $17.6 million after-tax charge related to environmental
obligations associated with former mining activities and an income tax
benefit of $16.2 million resulting from the resolution of certain tax issues
associated with prior years, with a net effect charge of $0.01 per share.
(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 income taxes (see Note 6).
48
50
NEWMONT MINING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
RATIO OF EARNINGS TO FIXED CHARGES
The ratios of earnings to fixed charges were 1.7, 6.3, 6.5, 10.3 and 6.6
for the years ended December 31, 1994, 1993, 1992, 1991 and 1990, respectively.
The ratio of earnings to fixed charges and preferred stock dividends were 1.1,
3.4, 5.9, 10.3 and 6.6 for the years ended December 31, 1994, 1993, 1992, 1991
and 1990, respectively. The Corporation guarantees certain third party debt
which had total interest obligations of $1.0 million, $0.8 million, $3.3
million, $4.0 million and $4.5 million for the years ended December 31, 1994,
1993, 1992, 1991 and 1990, 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.
49
51
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no disagreements with Arthur Andersen LLP, 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 1995 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 1995 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 1995 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 1995 annual meeting of stockholders and
is incorporated herein by reference.
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
-----
Report of Independent Public Accountants............................. 25
Statements of Consolidated Income.................................... 26
Consolidated Balance Sheets.......................................... 27
Statements of Consolidated Changes in Stockholders' Equity........... 28
Statements of Consolidated Cash Flows................................ 29
Notes to Consolidated Financial Statements........................... 30
2. Financial Statement Schedules
All 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.
50
52
3. Exhibits
3(a). Restated Certificate of Incorporation dated as of July 13, 1987.
Incorporated by reference to Exhibit 3 to registrant's Annual Report
on 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. Incorporated by reference to Exhibit 3(b) to registrant's
Annual Report on Form 10-K for the year ended December 31, 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 Annual
Report on 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 Annual Report on 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.
4(e). First Amendment dated November 27, 1990 and Second Amendment dated
and December 7, 1990 to the aforementioned Rights Agreement dated August
4(f). 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
Quarterly Report on 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). 1982 Key Employees Stock Option Plan. Incorporated by reference to
Exhibit to registrant's Registration Statement on Form S-8 (No.
33-10141).
10(b). 1987 Key Employees Stock Option Plan as amended as of October 25, 1993.
Incorporated by reference to Exhibit 10(e) to registrant's Annual
Report on Form 10-K for year ended December 31, 1993.
10(c). 1992 Key Employees Stock Plan as amended as of October 25, 1993.
Incorporated by reference to Exhibit 10(p) to registrant's Annual
Report on Form 10-K for the year ended December 31, 1993.
51
53
10(d). 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(e). 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(f). 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(g). Agreement dated October 15, 1993, effective November 1, 1993, among
registrant, NGC and Ronald C. Cambre. Incorporated by reference to
Exhibit 10 to registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1993.
10(h). 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(i). Tax Sharing Agreement dated as of January 1, 1994 between registrant
and NGC.
10(j). Consultation Agreement dated as of October 31, 1993 among registrant,
NGC and Gordon R. Parker. Incorporated by reference to Exhibit 10(s)
to registrant's Annual Report on Form 10-K for the year ended
December 31, 1993.
11. Statement re Computation of Per Share Earnings.
12. Statement re Computation of Ratio of Earnings to Fixed Charges and
Earnings to Fixed Charges and Preferred Stock Dividends.
21. Subsidiaries of registrant. Incorporated by reference to Exhibit 21 to
registrant's Annual Report on Form 10-K for the year ended December
31, 1993.
23. Consent of Independent Public Accountants.
24. Power of Attorney.
27. Financial Data Schedules.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the registrant during the quarter ended
December 31, 1994.
52
54
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 30, 1995
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
--------- ----- ----
* Director
---------------------------------------------
Rudolph I. J. Agnew
* Director
---------------------------------------------
J. P. Bolduc
* Chairman, President and
--------------------------------------------- Chief Executive Officer
Ronald C. Cambre and Director
* Director
---------------------------------------------
Joseph P. Flannery
* Director
---------------------------------------------
Thomas A. Holmes
* Director
---------------------------------------------
Robin A. Plumbridge
* Director March 30, 1995
---------------------------------------------
Moeen A. Qureshi
* Director
---------------------------------------------
Michael K. Reilly
* Director
---------------------------------------------
William I. M. Turner, Jr.
* Senior Vice President and
--------------------------------------------- Chief Financial Officer
Wayne W. Murdy (Principal Financial
Officer)
* Vice President and
--------------------------------------------- Controller
Gary E. Farmar (Principal Accounting
Officer)
*By /s/ TIMOTHY J. SCHMITT
---------------------------------------------
Timothy J. Schmitt
as Attorney-in-fact
55
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 3 of the Form 10-K.
On page 3 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 pages 1
through 5 of the Form 10-K. The map also includes a chart
indicating the location of various deposits with proven and
probable reserves.
2. Map of Location of the Yanacocha Project in Peru -- Page 7 of the
Form 10-K.
On page 7 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 pages 5 and 6 of the
Form 10-K. The map also includes a notation that Minera
Yanacocha S.A., the Peruvian corporation which owns the Yanacocha
project, is 38% owned by the registrant.
3. Map of Location of the Zarafshan-Newmont Project in Uzbekistan --
Page 8 of the Form 10-K.
On page 8 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 7
and 8 of the Form 10-K. The map also includes a notation that the
Zarafshan-Newmont joint venture, which owns the project, is 50%
owned by the registrant.
4. Map of Locations of the Minahasa Project and the Batu Hijau
Project in Indonesia -- Page 9 of the Form 10-K.
56
On page 9 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 8 and 9 of the Form 10-K. The map also
includes a notation that each of the Indonesian companies that
own the Minahasa project and the Batu Hijau project is 80% owned
by the registrant.
57
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
------- -----------
3(a). Restated Certificate of Incorporation dated as of July 13, 1987.
Incorporated by reference to Exhibit 3 to registrant's Annual Report
on 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. Incorporated by reference to Exhibit 3(b) to registrant's
Annual Report on Form 10-K for the year ended December 31, 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 Annual
Report on 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 Annual Report on 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.
4(e). First Amendment dated November 27, 1990 and Second Amendment dated
and December 7, 1990 to the aforementioned Rights Agreement dated August
4(f). 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
Quarterly Report on 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). 1982 Key Employees Stock Option Plan. Incorporated by reference to
Exhibit to registrant's Registration Statement on Form S-8 (No.
33-10141).
10(b). 1987 Key Employees Stock Option Plan as amended as of October 25, 1993.
Incorporated by reference to Exhibit 10(e) to registrant's Annual
Report on Form 10-K for year ended December 31, 1993.
10(c). 1992 Key Employees Stock Plan as amended as of October 25, 1993.
Incorporated by reference to Exhibit 10(p) to registrant's Annual
Report on Form 10-K for the year ended December 31, 1993.
58
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
------- -----------
10(d). 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(e). 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(f). 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(g). Agreement dated October 15, 1993, effective November 1, 1993, among
registrant, NGC and Ronald C. Cambre. Incorporated by reference to
Exhibit 10 to registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1993.
10(h). 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(i). Tax Sharing Agreement dated as of January 1, 1994 between registrant
and NGC.
10(j). Consultation Agreement dated as of October 31, 1993 among registrant,
NGC and Gordon R. Parker. Incorporated by reference to Exhibit 10(s)
to registrant's Annual Report on Form 10-K for the year ended
December 31, 1993.
11. Statement re Computation of Per Share Earnings.
12. Statement re Computation of Ratio of Earnings to Fixed Charges and
Earnings to Fixed Charges and Preferred Stock Dividends.
21. Subsidiaries of registrant. Incorporated by reference to Exhibit 21 to
registrant's Annual Report on Form 10-K for the year ended December
31, 1993.
23. Consent of Independent Public Accountants.
24. Power of Attorney.
27. Financial Data Schedules.
EX-10.I
2
EXHIBIT 10.I
1
EXHIBIT 10(i)
AGREEMENT FOR THE ALLOCATION OF UNITED STATES,
STATE AND FOREIGN CURRENT INCOME TAX LIABILITIES AND
BENEFITS BETWEEN NEWMONT MINING CORPORATION AND
NEWMONT GOLD COMPANY
AGREEMENT DATED AS OF JANUARY 1, 1994 BETWEEN NEWMONT MINING CORPORATION
("NEWMONT") AND NEWMONT GOLD COMPANY ("GOLD")
W I T N E S S E T H:
WHEREAS, Newmont files consolidated United States (hereinafter
referred to as "U.S.") income tax returns under the provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), and the applicable regulations
thereunder (the "Regulations");
WHEREAS, under the Code and Regulations each consolidated return must
include all corporations controlled by Newmont (the "Newmont Consolidated
Group");
WHEREAS, Newmont files various consolidated or combined state income
tax returns;
WHEREAS, Newmont and Gold have agreed as set forth herein respecting
the allocation and payment of current taxes payable and accounting therefor,
their respective participation and cooperation in coordinated tax planning and,
in other matters related to the consolidated tax returns of Newmont;
WHEREAS, the parties intend and agree that this Agreement For The
Allocation of Taxes (The "Agreement") supersedes any and all prior agreements
and amendments thereto and that this new Agreement governs the allocation of
taxes, interest and penalties for any and all taxable periods in the past,
present and future;
2
WHEREAS, the parties intend that Newmont's allocations of consolidated
current U.S. and state income tax liabilities to Gold shall fairly preserve the
economic privileges and rights which would have accrued to Newmont and Gold
from the filing of separate returns; and
WHEREAS, the parties intend and agree that Gold will succeed to all of
the tax attributes of Newmont as of December 31, 1993 as a result of the
transfer by Newmont of all of its assets (except for the majority of its Gold
shares), and Gold will assume Newmont's liabilities including Newmont's
liabilities for taxes, interest and penalties attributable to taxable periods
ending on or before December 31, 1993,
NOW, THEREFORE, in consideration of the foregoing and mutual
agreements hereinafter contained, the parties agree as follows:
1. COMPUTATION OF GOLD'S TAX LIABILITY. The current tax liability of
Gold in respect of a consolidated U.S. or state income tax return that is filed
by Newmont shall be as follows:
1.1 SEPARATE RETURN BASIS. Gold shall be liable for (or entitled to)
an amount equal to its current tax liability (or refund) for the same year
determined on a separate return basis. In calculating its tax liability on a
separate return basis for any and all purposes under this Agreement, Gold shall
include therein the taxable income, loss, credits and other relevant items
attributable to other members of the Newmont consolidated group
2
3
that are owned directly or indirectly by Gold. Gold and the members of the
Newmont consolidated group that are owned directly or indirectly by Gold are
sometimes referred to as the Gold Group.
1.1A EXCEPTION TO SEPARATE RETURN BASIS FOR CERTAIN TAX LIABILITIES OF
NEWMONT. For purposes of determining Gold's annual state and local income,
franchise or other forms of state and local tax liabilities (collectively
referred as "state tax" or "state taxes"), any and all state taxes that are
imposed on Newmont as a separate company or member of a consolidated, combined
or unitary group for state tax purposes shall be included in the state tax
liability of Gold. The same principles of this sub-paragraph (i.iA) shall apply
to any taxes imposed on Newmont by a taxing jurisdiction outside of the United
States.
1.2 SURTAX EXEMPTION. Gold shall be allowed an allocable portion of
(a) any surtax exemption and (b) the benefit of any graduated tax rates. Such
allocable portion shall be determined on a percentage basis as follows: the
numerator of the percentage shall be the taxable income of Gold; the
denominator shall be the combined taxable income of all members of the Newmont
Consolidated Group (hereinafter referred to as "members") included in such
return. For purposes of such calculation, members which have no taxable income,
or negative taxable income, shall be excluded.
1.3 INVESTMENT TAX CREDITS. Investment tax credits generated
3
4
by Gold shall be allowed to Gold to the extent of the allowability of said
credits on a separate return basis.
Recapture shall be calculated on all premature retirements of
investment tax credit property on a separate company basis except that, in the
case of the retirement of investment tax credit property acquired in years for
which the investment tax credit is carried forward on a separate company basis,
the recapture shall reduce the investment tax credit carried forward on a
separate company basis.
For purpose of the used property limitation, Newmont shall have sole
discretion to determine the property on which the credit is claimed in order to
maximize the allowable credit and to attribute such benefit to the member which
acquired the property on which the credit is claimed.
1.4 CORPORATE ALTERNATIVE MINIMUM TAX ("AMT"). Any tax liability
caused by the AMT shall be determined on a separate company basis.
Gold shall pay to Newmont the greater of the regular corporate income
tax or the corporate AMT, both computed on a separate return basis.
1.5 FOREIGN TAX CREDIT. With respect to the benefits of taxes paid to
foreign countries or to possessions of the U.S.,
4
5
Newmont shall have the sole right to elect whether a foreign tax credit shall
be claimed or deductions shall be taken with respect to such taxes on any
consolidated return. Any such election made by Newmont shall be binding on
Gold. If Newmont elects to claim a foreign tax credit, foreign taxes deemed
paid pursuant to the applicable provisions of the Code shall be included in the
affected computation.
2. COMPUTATION OF GOLD'S INCOME. Gold's taxable income shall be
determined on a separate return basis subject, however, to the following
principles and modifications.
2.1 DIVIDENDS RECEIVED DEDUCTION. In computing Gold's taxable income,
dividends received by Gold from other members of the Newmont Consolidated Group
shall qualify for the 100% dividend received deduction. The dividend received
deduction attributable to other sources shall be allowed consistent with the
provisions of the Internal Revenue Code or applicable state code and the
regulations applicable to corporations filing separate returns.
2.2 DETERMINATION OF CAPITAL GAINS AND LOSSES. A determination of
short or 1ong term capital gains or capital losses recognized by Gold shall be
made on a separate company basis. Any benefits derived on a consolidated basis
for such gains and losses through the use of an alternative tax calculation
will be given effect in determining the income and the tax liability of Gold.
5
6
Any benefits derived from the carryforward or carryback of capital gains or
losses will be given effect in determining the income and the tax liability of
Gold in the year such benefit is availed of by the Newmont Consolidated Group.
2.3 ALLOWANCE OF OPERATING LOSSES AND CARRYBACKS AND CARRYFORWARDS OF
TAX ATTRIBUTES. Gold shall be allowed a deduction from taxable income for a net
operating loss determined on a separate return basis to the extent benefit is
obtained by the Newmont Consolidated Group. Such loss shall be given effect in
determining Gold's income and tax liability only to the extent that such loss
is availed of in reducing the consolidated tax liability of the Newmont
Consolidated Group and/or results in an actual refund of tax.
2.4 DEFERRED INTERCOMPANY TRANSACTIONS. In the event that gains or
losses that arise in connection with the transfer by Newmont to Gold of all of
its assets (except for the majority of its Gold shares) but which are initially
deferred for tax purposes, are subsequently triggered by virtue of a
restoration event under the applicable tax laws and regulations, Gold shall
include such triggered deferred gains and losses in its determination of its
separate company taxable income.
3. PAYMENT OF TAXES. Newmont shall have the responsibility and
authority to make tax payments due to the Internal Revenue
6
7
Service ("IRS") and state taxing authorities, and to collect all refunds
distributed by the IRS or state taxing authorities.
3.1 ESTIMATED TAX PAYMENTS. Newmont shall determine the estimated
amount of tax payable by Gold to Newmont in accordance with the provisions of
this Agreement for the year to date and Gold shall pay over to Newmont the
amount so determined.
3.2 UNDERPAYMENT OR OVERPAYMENT OF ESTIMATED TAX. Upon the filing of
the consolidated tax returns of the Newmont Consolidated Group for each year,
Newmont shall compute the underpayment or overpayment of estimated taxes
remitted by Gold and shall bill or refund any difference, as appropriate. Any
interest or penalty due under U.S. or state tax laws shall be allocated to Gold
if it caused such interest or penalty to be due.
3.3 LIABILITY FOR TAX, INTEREST AND PENALTIES. While Gold has the
primary responsibility to pay to Newmont the amount of the taxes, interest and
penalties imposed on the Newmont Consolidated Group which are properly
attributable to Gold under the principles of this Tax Allocation Agreement, in
the event that Gold does not satisfy its obligations hereunder, Newmont can
seek payment of such obligations from any member of the Gold Group.
4. ADJUSTMENT OF TAXES ON EXAMINATION.
7
8
4.1 ADDITIONAL TAX DUE OR REFUND OF TAX. Upon final settlement of
adjustments to the consolidated U.S. or state income tax returns proposed by
the IRS or state authorities, the tax liability of Gold for the year or years
under examination shall be redetermined pursuant to Section 1 of this Agreement
based upon adjustments made and agreed upon by Newmont in the settlement
agreement.
If the adjustments agreed upon by Newmont with the IRS or state
authority result in a refund of tax to Newmont, the tax liability of Gold for
the year or years under examination shall be redetermined pursuant to Section 1
of this Agreement with respect to the year or years to which such refund
relates, and shall be calculated at the rates used for the period or periods in
question by the IRS or state authority. Newmont shall refund any tax thereby
shown to be due Gold.
4.2 INTEREST FROM EXAMINATIONS. If the adjustments result in the
payment of interest to a tax authority, interest shall be allocated to Gold on
a pro rata basis consistent with the adjustments made as part of the
examination.
4.3 CONDUCT OF EXAMINATION. Newmont shall have sole responsibility for
conducting any agents' examinations for the Newmont Consolidated Group.
4.4 COOPERATION IN EXAMINATION. Gold will inform Newmont
8
9
promptly of all questions raised by agents conducting an examination of its tax
returns and shall cooperate with Newmont's accountants, tax advisers and
counsel in working with the agents in response to proposed adjustments.
4.5 AGREEMENT AS TO SETTLEMENT. Any adjustment to Gold's tax liability
arising out of an examination shall be computed on the basis of agreements
reached between Newmont and the tax authority.
4.6 AUTHORITY TO SETTLE EXAMINATION. Gold waives any and all present
and future claims against Newmont relating to any compromise, arrangement or
other agreement between Newmont and the tax authority, including but not
limited to such as may be based on allegations that such compromise,
arrangement or agreement caused an overstatement of Gold's tax liability to
Newmont or that Gold could have reached a more favorable agreement with the
taxing authority on a separate company basis.
5. FURNISHING OF TAX INFORMATION TO NEWMONT. Gold shall deliver to
Newmont, at times reasonably determined by the Vice President, Taxes of
Newmont, all data required for preparation of Gold's income tax return and
estimated payments on a separate company basis. Such tax data shall have been
reviewed by the principal financial officer of Gold and shall be as full and
complete as would have been required to file Gold's income tax return (or to
pay estimated tax) on a separate company basis.
9
10
6. MISCELLANEOUS PROVISIONS.
6.1 AUTHORITY TO CHANGE AGREEMENT. Gold hereby agrees that Newmont,
for so long as Newmont is the common parent, shall have the authority to make
any alterations in this Agreement to comply with any changes in the Code, the
Regulations or state provisions relating to consolidated income tax returns.
6.2 CONSENT TO REGULATIONS. At any time during a taxable year that
Gold has been a member of the Newmont Consolidated Group. Gold consents to all
regulations relating to the filing of a consolidated tax return.
6.3 NEW MEMBERS OF CONSOLIDATED GROUP. Any subsidiary of Gold which
becomes a controlled corporation required to join in the consolidated tax
returns with Newmont shall become a member of the Newmont Consolidated Group by
signing a master copy of this Agreement, which shall be maintained for such
purpose by Newmont.
6.4 TERM OF AGREEMENT. This Agreement shall remain in effect so long
as Gold is a member of the Newmont Consolidated Group.
6.5 SUBSEQUENT ALTERATIONS AND MODIFICATIONS. Subject to Section 6.1
above, all alterations and modifications of this Agreement must be in writing
and signed by all parties.
10
11
6.6 ELECTIONS. Newmont, as the common parent, shall have the sole
authority to make any or all elections available under the Code, Regulations or
state provision.
6.7 INTERPRETATION. Newmont, as the common parent, shall have the
sole authority to interpret the provisions and the applications of this
Agreement so as to render it consistent with the Code, the Regulations and all
other state and local income tax law and regulations.
IN WITNESS THEREOF, Newmont and Gold have entered into this Agreement
as of January 1, 1994.
NEWMONT MINING CORPORATION
By: /s/ Ronald C. Cambre
Ronald C. Cambre
Chairman, President and CEO
NEWMONT GOLD COMPANY
By: /s/ Graham M. Clark, Jr.
Graham M. Clark, Jr.
Senior Vice President and
General Counsel
11
EX-11
3
EXHIBIT 11
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,
--------------------------------
1994 1993 1992
-------- -------- --------
INCOME DATA:
Income before cumulative
effect of changes in
accounting principles $ 76,121 $ 94,669 $ 90,621
Preferred stock dividends (15,813) (15,910) (1,747)
-------- -------- --------
Income before cumulative
effect of changes in
accounting principles
applicable to common
shares 60,308 78,759 88,874
Cumulative effect of
changes in accounting
principles - 38,470 (11,572)
-------- -------- --------
Net income applicable to
common shares $ 60,308 $117,229 $ 77,302
======== ======== ========
COMMON AND COMMON EQUIVALENT SHARES:
Weighted average common
shares 85,948 85,286 84,887
Equivalent common shares
from stock options 199 176 146
-------- -------- --------
Common and common
equivalent shares 86,147 85,462 85,033
======== ======== ========
EARNINGS PER COMMON SHARE:
Income before cumulative
effect of changes in
accounting principles $ 0.70 $ 0.92 $ 1.04
Cumulative effect of
changes in accounting
principles - 0.45 (0.14)
-------- -------- --------
Net income per common and
common equivalent
shares $ 0.70 $ 1.37 $ 0.90
======== ======== ========
Page 1 of 2
2
Exhibit 11
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,
--------------------------------
1994 1993 1992
-------- -------- --------
INCOME DATA:
Income before cumulative
effect of changes in
accounting principles $ 76,121 $ 94,669 $ 90,621
Cumulative effect of
changes in accounting
principles - 38,470 (11,572)
-------- -------- --------
Net income applicable to
common shares $ 76,121 $133,139 $ 79,049
======== ======== ========
COMMON AND COMMON EQUIVALENT SHARES:
Weighted average common
shares 85,948 85,286 84,887
Equivalent common shares
from stock options 199 352 146
Equivalent common shares
from conversion of
preferred stock 7,899 7,899 7,899
-------- -------- --------
Common and common
equivalent shares 94,046 93,537 92,932
======== ======== ========
EARNINGS PER COMMON SHARE:
Income before cumulative
effect of changes in
accounting principles $ 0.81 $ 1.01 $ 0.98
Cumulative effect of
changes in accounting
principles - 0.41 (0.13)
-------- -------- --------
Net income per common
and common equivalent
shares $ 0.81 $ 1.42 $ 0.85
======== ======== ========
Page 2 of 2
EX-12
4
EXHIBIT 12
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,
---------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- -------
Earnings:
Income before income taxes and
cumulative effect of changes
in accounting principles $ 46,787 $113,234 $ 93,399 $122,218 $240,460
Adjustments:
Net interest expense (1) 9,823 12,393 14,555 13,021 42,373
Amortization of capitalized
interest 1,928 1,814 1,410 1,668 1,236
Portion of rental expense
representative of interest 825 800 1,088 1,572 2,017
Minority interest of majority-
owned subsidiaries that have
fixed charges 7,273 11,113 7,580 12,455 14,021
Undistributed income of less
than 50% owned entities (16,089) (3,526) - - (7,460)
-------- -------- -------- -------- --------
$ 50,547 $135,828 $118,032 $150,934 $292,647
======== ======== ======== ======== ========
Fixed Charges:
Net interest expense (1) $ 9,823 $ 12,393 $ 14,555 $ 13,021 $ 42,373
Capitalized interest 19,618 8,480 2,405 - -
Portion of rental expense
representative of interest 825 800 1,088 1,572 2,017
-------- -------- -------- -------- --------
$ 30,266 $ 21,673 $ 18,048 $ 14,593 $ 44,390
======== ======== ======== ======== ========
Ratio of Earnings to Fixed Charges 1.7 6.3 6.5 10.3 6.6
=== === ==== ==== ===
(1) Includes interest expense of majority-owned subsidiaries and amortization
of debt issuance costs.
Page 1 of 2
2
Exhibit 12
Newmont Mining Corporation and Subsidiaries
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(Amounts in thousands except ratios)
(Unaudited)
Year Ended December 31,
---------------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
Earnings:
Income before income taxes and
cumulative effect of changes in
accounting principles $ 46,787 $113,234 $ 93,399 $122,218 $240,460
Adjustments:
Net interest expense (1) 9,823 12,393 14,555 13,021 42,373
Amortization of capitalized
interest 1,928 1,814 1,410 1,668 1,236
Portion of rental expense
representative of interest 825 800 1,088 1,572 2,017
Minority interest of majority-
owned subsidiaries that have
fixed charges 7,273 11,113 7,580 12,455 14,021
Undistributed income of less
than 50% owned entities (16,089) (3,526) - - (7,460)
-------- -------- -------- -------- --------
$ 50,547 $135,828 $118,032 $150,934 $292,647
======== ======== ======== ======== ========
Fixed Charges:
Net interest expense (1) $ 9,823 $ 12,393 $ 14,555 $ 13,021 $ 42,373
Preferred stock dividends (2) 15,813(3) 18,702 1,796 - -
Capitalized interest 19,618 8,480 2,405 - -
Portion of rental expense
representative of interest 825 800 1,088 1,572 2,017
-------- -------- -------- -------- --------
$ 46,079 $ 40,375 $ 19,844 $ 14,593 $ 44,390
======== ======== ======== ======== ========
Ratio of Earnings to Fixed Charges 1.1 3.4 5.9 10.3 6.6
=== === ==== ==== ===
(1) Includes interest expense of majority-owned subsidiaries and amortization
of debt issuance costs.
(2) Increased to represent pre-tax earnings which would be required to cover
such dividend requriements, unless otherwise noted.
(3) Reflects actual preferred stock dividends without an adjustment for
pre-tax earnings which would be required to cover such dividend requirements
due to a tax benefit recognized in the period.
Page 2 of 2
EX-23
5
EXHIBIT 23
1
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report included in this 1994 Form 10-K into Newmont Mining Corporation's
previously filed S-8 Registration Statement No. 33-49872, S-8 Registration
Statement No. 33-53267, S-8 Registration Statement No. 33-6129 and S-3
Registration Statement No. 33-54249.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Denver, Colorado,
March 27, 1995.
EX-24
6
EXHIBIT 24
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 he 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, 1994 and the undersigned hereby ratifies and confirms all that said
attorney-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 15th day of March 1995.
Signature Title
--------- -----
/s/ RUDOLPH I. J. AGNEW Director
-----------------------------
Rudolph I. J. Agnew
/s/ J. P. BOLDUC Director
-----------------------------
J. P. Bolduc
/s/ RONALD C. CAMBRE Chairman, President and Chief
----------------------------- Executive Officer and Director
Ronald C. Cambre (Principal Executive Officer)
/s/ JOSEPH P. FLANNERY Director
-----------------------------
Joseph P. Flannery
/s/ THOMAS A. HOLMES Director
-----------------------------
Thomas A. Holmes
2
/s/ ROBIN A. PLUMBRIDGE Director
-----------------------------
Robin A. Plumbridge
/s/ MOEEN A. QURESHI Director
-----------------------------
Moeen A. Qureshi
/s/ MICHAEL K. REILLY Director
-----------------------------
Michael K. Reilly
/s/ WILLIAM I. M. TURNER, JR. Director
-----------------------------
William I. M. Turner, Jr.
/s/ WAYNE W. MURDY Senior Vice President
----------------------------- and Chief Financial Officer
Wayne W. Murdy (Principal Financial Officer)
/s/ GARY E. FARMAR Vice President and Controller
----------------------------- (Principal Accounting
Gary E. Farmar Officer)
-2-
EX-27
7
FINANCIAL DATA SCHEDULE
5
1,000
12-MOS
DEC-31-1994
DEC-31-1994
160,637
13,438
37,597
0
130,931
370,134
1,722,636
603,350
1,656,657
153,215
593,634
440,528
0
14,375
218,562
1,656,657
597,370
619,686
326,385
417,500
153,698
0
9,823
54,060
(29,334)
76,121
0
0
0
76,121
0.70
0.81