Newmont Announces Solid Second Quarter 2020 Results

·21 mins read

Company's second quarter results highlight resilient operating model and significant leverage to rising gold prices from diversified portfolio of world-class assets

Newmont Corporation (NYSE: NEM, TSX: NGT) (Newmont or the Company) today announced second quarter 2020 results.

SECOND QUARTER 2020 HIGHLIGHTS

  • Produced 1.3 million attributable ounces of gold* and reported CAS* of $748 per ounce and AISC* of $1,097 per ounce and produced 138 thousand attributable gold equivalent ounces from co-products

  • Generated $668 million of cash from continuing operations and $388 million of Free Cash Flow* while safely managing the ramp up of operations in care and maintenance

  • Reported $3.8 billion of consolidated cash with $6.7 billion of liquidity and a net debt to adjusted EBITDA* ratio of 0.6x

  • Declared second quarter dividend of $0.25 per share

  • Returned >$2.0 billion to shareholders through dividends and share buybacks since January 2019

"In the second quarter we delivered solid financial performance with $984 million in adjusted EBITDA and $388 million in free cash flow, both substantial increases over the prior year quarter. Our focus remains on ensuring the health, safety and wellbeing of our workforce and neighboring communities as we manage through the Covid pandemic. I am very proud of our workforce for the agility and resolve that they have demonstrated during these challenging times," said Tom Palmer, President and Chief Executive Officer. "We safely and efficiently executed restart plans at our mines previously in care and maintenance and Newmont’s world-class portfolio is well positioned to deliver an even stronger second half of 2020. The ongoing favorable gold price environment amplifies our free cash flow generation yet our discipline around capital allocation will not change as we continue to invest in profitable projects and provide shareholders industry-leading returns while maintaining a strong balance sheet."

- Tom Palmer, President and Chief Executive Officer

COVID-19 UPDATE

  • Continued our wide-ranging controls at the Company's operations and offices to put the health, safety, and overall wellbeing of Newmont's people and communities above all else

  • Implemented effective quarantine and contact tracing procedures for positive cases

  • Executed safe and efficient restart plans at all five sites previously in care and maintenance, including Cerro Negro, Yanacocha, Éléonore and Peñasquito and Musselwhite

  • Delivered strong second quarter production despite a reduction of ~300Kozs gold and ~100Koz of co-product GEOs from operational downtime at sites in care and maintenance

  • Incurred $195 million of care and maintenance costs during the second quarter, which included wages, direct operating costs for critical activities and non-cash depreciation

  • Incurred $33 million of incremental Covid specific costs for activities such as additional health and safety procedures, increased transportation and community fund contributions

  • Distributed $5.7 million to date from Newmont's $20 million Global Community Support Fund focused on employee and community health, food security and local economic resilience through partnerships with local governments, medical institutions, charities and non-governmental organizations

*See footnotes provided below, as well as the cautionary statement at end of release regarding forward-looking statements, including with respect to financial and operating outlook and expected returns to shareholders.

SECOND QUARTER 2020 FINANCIAL AND PRODUCTION SUMMARY

Q2'20

Q1'20

Q2'19

Attributable gold production (million ounces)

1.26

1.48

1.59

Gold costs applicable to sales (CAS) ($ per ounce)

$

748

$

781

$

759

Gold all-in sustaining costs (AISC) ($ per ounce)

$

1,097

$

1,030

$

1,016

GAAP Net income (US $ millions)

$

412

$

837

$

1

Adjusted net income (US $ millions)

$

261

$

326

$

92

Adjusted EBITDA (US $ millions)

$

984

$

1,118

$

679

Cash flow from continuing operations (US $ millions)

$

668

$

939

$

301

Capital Expenditures (US $ millions)

$

280

$

328

$

380

Free cash flow (US $ millions)

$

388

$

611

$

(79)

Attributable gold production1 decreased 21 percent to 1,255 thousand ounces from the prior year quarter primarily due to the sites in care and maintenance and the sale of Red Lake and Kalgoorlie, partially offset by higher grades at Porcupine and higher grades and increased throughput at Tanami.

Gold CAS2 decreased 24 percent to $940 million from the prior year quarter due to the sites in care and maintenance and Gold CAS per ounce improved one percent to $748 per ounce primarily due to lower stockpile and leach pad inventory adjustments, partially offset by lower ounces sold.

Gold AISC3 increased eight percent to $1,097 per ounce from the prior year quarter primarily due to care and maintenance costs, partially offset by lower sustaining capital spend.

Attributable gold equivalent ounce (GEO) production from other metals increased to 138 thousand ounces primarily due to the impact of the blockade at Peñasquito in North America last year, partially offset by the classification of copper as a by-product at Phoenix following the formation of Nevada Gold Mines, and lower grade and throughput at Boddington. CAS from other metals totaled $118 million for the quarter. CAS per GEO2 improved by 58 percent to $555 per ounce from the prior year quarter primarily due to higher sales at Peñasquito, partially offset by higher mill maintenance costs at Boddington and the classification of copper as a by-product at Phoenix. AISC per GEO3 improved 41 percent to $974 per ounce primarily due to lower CAS from other metals.

Net income (loss) from continuing operations attributable to Newmont stockholders for the quarter was $412 million or $0.51 per diluted share, an increase of $411 million from the prior year quarter primarily due to higher average realized gold prices, the increase in fair value of investments, lower operating costs and lower transaction and integration costs; partially offset by lower sales volumes from certain sites in care and maintenance and the sale of Kalgoorlie.

Adjusted net income4 was $261 million or $0.32 per diluted share, compared to $92 million or $0.12 per diluted share in the prior year quarter. The adjustments to net income of $0.19 primarily related to changes in the fair value of investments, COVID-19 specific costs, valuation allowance and other tax adjustments, and transaction and integration costs. Adjusted EBITDA5 improved 45 percent to $984 million for the quarter, compared to $679 million for the prior year quarter.

Revenue increased five percent from the prior year quarter to $2,365 million primarily due to higher average realized gold prices, partially offset by lower gold sales volumes.

Average realized price6 for gold was $1,724, an increase of $407 per ounce over the prior year quarter; average realized price for copper was $2.91, an increase of $0.43 per pound over the prior year quarter; average realized price for silver was $14.70 per ounce, an increase of $0.50 per ounce over the prior year quarter; average realized price for lead was $0.75 per pound, a decrease of $0.01 per pound; average realized price for zinc was $0.70 per pound, and there were no zinc sales in the prior year quarter.

Capital expenditures7 decreased by 26 percent from the prior year quarter to $280 million, primarily due to lower spend from five operations being placed into care and maintenance, lower sustaining capital spend from the sale of Red Lake and Kalgoorlie, and reduced spending from the completion of Borden Underground, Ahafo Mill Expansion, and other projects in 2019. Development capital expenditures in 2020 primarily include advancing Tanami Expansion 2, Yanacocha Sulfides, Ahafo North and Subika mining method change, Musselwhite Materials Handling and conveyor installation, Éléonore Lower Mine Material Handling System, Quecher Main, and projects associated with the Company’s ownership interest in Nevada Gold Mines.

Consolidated operating cash flow from continuing operations increased 122 percent from the prior year quarter to $668 million due to higher realized gold prices, partially offset by lower sales volumes. Free Cash Flow8 also increased to $388 million primarily due to higher operating cash flow and lower capital expenditures.

Balance sheet ended the quarter with $3.8 billion of consolidated cash and approximately $6.7 billion of liquidity; reported net debt to adjusted EBITDA of 0.6x9.

Nevada Gold Mines (NGM) attributable gold production was 326 thousand ounces with CAS of $797 per ounce and AISC of $979 per ounce for the second quarter 2020. EBITDA for NGM was $277 million.

PROJECTS UPDATE

Newmont’s capital-efficient project pipeline supports stable production with improving margins and mine life. Funding for the current development capital projects Tanami Expansion 2 and Musselwhite Materials Handling has been approved and the projects are in execution. Additional projects not listed below represent incremental improvements to the Company's outlook.

  • Tanami Expansion 2 (Australia) secures Tanami’s future as a long-life, low cost producer with potential to extend mine life to 2040 through the addition of a 1,460 meter hoisting shaft and supporting infrastructure to achieve 3.5 million tonnes per year of production and provide a platform for future growth. The expansion is expected to increase average annual gold production by approximately 150,000 to 200,000 ounces per year for the first five years beginning in 2023, and is expected to reduce operating costs by approximately 10 percent. Capital costs for the project are estimated to be between $700 million and $800 million.

  • Musselwhite Materials Handling (North America) improves material movement from Musselwhite’s two main zones below Lake Opapimiskan. An underground shaft will hoist ore from the underground crushers, reducing haulage distances and ventilation costs. The project is 95 percent complete; however, full commissioning has been delayed amidst the Covid pandemic as Musselwhite operations were previously on care and maintenance. The Company expects to commission the project upon completion of the Musselwhite conveyor system by the end of 2020.

OUTLOOK

On May 19, Newmont provided revised 2020 outlook as the Company's mines that were previously in care and maintenance began ramping up. Today, the Company is reaffirming its latest 2020 production outlook and is providing additional details on its regional and site-level guidance.

Newmont's 2020 attributable gold production remains at approximately 6.0 million ounces and the Company expects to produce approximately 1.0 million gold equivalent ounces from co-products. Gold CAS has been lowered to $760 per ounce, while gold AISC is unchanged at $1,015 per ounce on increased sustaining capital spend.

Newmont continues to progress the majority of its development and sustaining capital projects, including Tanami Expansion 2, developing the sub-level shrinkage mining method at Subika Underground and advancing laybacks at Boddington and Ahafo. However, total 2020 capital expenditure is expected to be approximately $1.4 billion due to reductions in non-essential activities and changes to the development capital schedule for Tanami Expansion 2, which defers some expenditure to 2021.

For exploration and advanced projects, approximately 80 percent of the Company’s exploration budget is allocated to near-mine activities and the majority of those programs continued through the second quarter at sites that were operating. Newmont's 2020 exploration and advanced project spend has been lowered to approximately $350 million as all Greenfield programs were suspended and infill drilling programs were on hold at operations in care and maintenance. The Company is currently ramping up drilling programs and preparing to restart Greenfields activities as soon as local restrictions are lifted in areas of Africa, Australia and South America. Advanced project study work for Yanacocha Sulfides and Ahafo North continues remotely.

Newmont will continue to maintain wide-ranging protective measures for its workforce and neighboring communities, including screening, physical distancing, deep cleaning, and avoiding exposure for at-risk individuals. If at any point the Company determines that continuing operations poses an increased risk to our workforce or host communities, it will reduce operational activities up to and including care and maintenance and management of critical environmental systems. Newmont’s 2020 outlook assumes operations continue throughout the remainder of the year without major interruptions.

1

Attributable gold production for the second quarter 2020 includes 74 thousand ounces from the Company’s equity method investment in Pueblo Viejo (40%)

2

Non-GAAP measure. See end of this release for reconciliation to Costs applicable to sales.

3

Non-GAAP measure. See end of this release for reconciliation to Costs applicable to sales.

4

Non-GAAP measure. See end of this release for reconciliation to Net income (loss) attributable to Newmont stockholders.

5

Non-GAAP measure. See end of this release for reconciliation to Net income (loss).

6

Non-GAAP measure. See end of this release for reconciliation to Sales.

7

Capital expenditures refers to Additions to property plant and mine development from the Consolidated Statements of Cash Flows.

8

Non-GAAP measure. See end of this release for reconciliation to Net cash provided by operating activities.

9

Non-GAAP measure. See end of this release for reconciliation.

Newmont Outlook (+/-5%)

2020

Consolidated Production (koz)

5,900

Attributable Production* (koz)

6,000

Consolidated Gold CAS ($/oz)

760

Consolidated Gold All-in Sustaining Costs ($/oz)

1,015

Consolidated Co-products (GEOs koz)

1,010

Attributable Co-products (GEOs koz)

1,010

Consolidated GEO CAS ($/oz)

605

Consolidated GEO All-in Sustaining Costs ($/oz)

945

Consolidated Sustaining Capital Expenditures ($M)

900

Consolidated Development Capital Expenditures ($M)

475

Attributable Sustaining Capital Expenditures ($M)

875

Attributable Development Capital Expenditures ($M)

425

*Attributable gold production for 2020 includes 375,000 ounces from the Company’s equity method investment in Pueblo Viejo (40%).

2020 Regional Production And Cost Overview:

Australia

Attributable Production (koz)

1,180

Attributable Co-products (GEOs koz)

130

Consolidated Gold CAS ($/oz)

700

Consolidated Gold All-in Sustaining Costs ($/oz)

900

Consolidated Sustaining Capital Expenditures ($M)

205

Consolidated Development Capital Expenditures ($M)

145

  • 2020 production and cost outlook unchanged from previous guidance.

  • Full Potential at Boddington improves mining rates and grade increases throughout the year with the three year stripping campaign nearing completion in the South Pit and Tanami continues to deliver solid performance.

  • Development capital decreased by $125 million due to reductions in non-essential activities being postponed and changes to the development capital schedule for Tanami Expansion 2 which defers some expenditure to 2021.

Africa

Attributable Production (koz)

850

Consolidated Gold CAS ($/oz)

710

Consolidated Gold All-in Sustaining Costs ($/oz)

870

Consolidated Sustaining Capital Expenditures ($M)

90

Consolidated Development Capital Expenditures ($M)

70

  • 2020 production and cost outlook unchanged from previous guidance.

  • Africa benefits from a full year of production from the Ahafo Mill Expansion which is offset by mine sequencing in both the Subika and Awonsu open pits, a change in mining method at Subika Underground and lower grades at Akyem.

North America

Attributable Production (koz)

1,410

Attributable Co-products (GEOs koz)

880

Consolidated Gold CAS ($/oz)

775

Consolidated Gold All-in Sustaining Costs ($/oz)

1,040

Consolidated Sustaining Capital Expenditures ($M)

275

Consolidated Development Capital Expenditures ($M)

70

  • Revised 2020 outlook includes the impacts from Peñasquito, Éléonore and Musselwhite being temporarily placed into care and maintenance.

  • The Musselwhite Materials Handling project is 95 percent complete and the conveyor system is on track to be fully commissioned by year end.

  • Éléonore production and cost outlook reflects the ongoing work to integrate the geotechnical model and updated Reserves to fully optimize a life of mine plan and unlock additional value.

  • Porcupine and CC&V outlook unchanged from previous guidance.

South America

Attributable Production (koz)

1,135

Consolidated Gold CAS ($/oz)

815

Consolidated Gold All-in Sustaining Costs ($/oz)

1,105

Consolidated Sustaining Capital Expenditures ($M)

110

Consolidated Development Capital Expenditures ($M)

120

  • Revised 2020 outlook includes the impacts from Cerro Negro and Yanacocha being temporarily placed into care and maintenance.

  • Cerro Negro production and cost outlook reflects the Covid-related constraints on advancing mine development to access to higher-grade ore originally planned for the fourth quarter of 2020.

Nevada Gold Mines (NGM)

Attributable Production (koz)

1,375

Consolidated Gold CAS ($/oz)

690

Consolidated Gold All-in Sustaining Costs ($/oz)

880

Consolidated Sustaining Capital Expenditures ($M)

185

Consolidated Development Capital Expenditures ($M)

45

  • Production, CAS & AISC for the Company’s 38.5 percent ownership interest in NGM unchanged, as provided by Barrick Gold Corporation.

2020 Outlooka

2020 Outlook (+/-5%)

Consolidated Production (Koz, GEOS Koz)

Attributable Production (Koz, GEOs Koz)

Consolidated CAS ($/oz)

Consolidated All-In Sustaining Costs b ($/oz)

Consolidated Sustaining Capital Expenditures ($M)

Consolidated Development Capital Expenditures ($M)

Attributable Sustaining Capital Expenditures ($M)

Attributable Development Capital Expenditures ($M)

North America

1,410

1,410

775

1,040

275

70

275

70

South America

1,030

1,135

815

1,105

110

120

90

80

Australia

1,180

1,180

700

900

205

145

205

145

Africa

850

850

710

870

90

70

90

70

Nevada Gold Minesc

1,375

1,375

690

880

185

45

185

45

Total Goldd

5,900

6,000

760

1,015

900

475

875

425

Total Co-productse

1,010

1,010

605

945

2020 Consolidated Expense Outlook ($M) (+/-5%)

General & Administrative

265

Interest Expense

300

Depreciation and Amortization

2,250

Advanced Projects & Exploration

350

Adjusted Tax Rate f,g

38% - 42%

Federal Tax Rate g

29% - 33%

Mining Tax Rate g

8% - 10%

a 2020 outlook projections used in this presentation are considered forward-looking statements and represent management’s good faith estimates or expectations of future production results as of July 30, 2020. Outlook is based upon certain assumptions, including, but not limited to, metal prices, oil prices, certain exchange rates and other assumptions. For example, 2020 Outlook assumes $1,200/oz gold, $16/oz silver, $2.75/lb copper, $1.20/lb zinc, $0.95/lb lead, $0.75 USD/AUD exchange rate, $0.77 USD/CAD exchange rate and $60/barrel WTI; AISC and CAS estimates do not include inflation, for the remainder of the year. Production, CAS, AISC and capital estimates exclude projects that have not yet been approved. The potential impact on inventory valuation as a result of lower prices, input costs, and project decisions are not included as part of this Outlook. Assumptions used for purposes of Outlook may prove to be incorrect and actual results may differ from those anticipated, including variation beyond a +/-5% range. Outlook cannot be guaranteed. As such, investors are cautioned not to place undue reliance upon Outlook and forward-looking statements as there can be no assurance that the plans, assumptions or expectations upon which they are placed will occur. Amounts may not recalculate to totals due to rounding. See cautionary at the end of this release.

b All-in sustaining costs or AISC as used in the Company’s Outlook is a non-GAAP metric; see below for further information and reconciliation to consolidated 2020 CAS outlook.

c Represents the ownership interest in the Nevada Gold Mines (NGM) joint venture. NGM is owned 38.5% by Newmont and owned 61.5% and operated by Barrick. The Company accounts for its interest in NGM using the proportionate consolidation method, thereby recognizing its pro-rata share of the assets, liabilities and operations of NGM.

d Attributable gold production outlook includes the Company’s equity investment (40%) in Pueblo Viejo with ~375Koz in 2020; does not include the Company’s other equity investments. Attributable gold production outlook represents the Company's 51.35% interest for Yanacocha and a 75% interest for Merian.

e Gold equivalent ounces (GEO) is calculated as pounds or ounces produced multiplied by the ratio of the other metal’s price to the gold price, using Gold ($1,200/oz.), Copper ($2.75/lb.), Silver ($16/oz.), Lead ($0.95/lb.), and Zinc ($1.20/lb.) pricing.

f The adjusted tax rate excludes certain items such as tax valuation allowance adjustments.

g Assuming average prices of $1,400 per ounce for gold, $16 per ounce for silver, $2.75 per pound for copper, $0.95 per pound for lead, and $1.20 per pound for zinc and achievement of current production and sales volumes and cost estimates, we estimate our consolidated adjusted effective tax rate related to continuing operations for 2020 will be between 38%-42%.

2020 Site Outlooka as of July 30, 2020

Consolidated Production (Koz)

Attributable Production (Koz)

Consolidated CAS
($/oz)

Consolidated

All-In Sustaining Costs b

($/oz)

Consolidated Sustaining Capital Expenditures ($M)

Consolidated Development Capital Expenditures ($M)

CC&V

285

285

1,000

1,175

35

Éléonore

190

190

920

1,350

40

10

Peñasquito

510

510

565

770

130

Porcupine

325

325

795

975

40

10

Musselwhite

95

95

1,230

2,020

30

50

Cerro Negro

250

250

785

1,100

40

30

Yanacocha c

335

175

975

1,430

20

90

Merian c

445

335

715

840

50

Pueblo Viejo

375

Boddington

700

700

855

1,015

115

15

Tanami

480

480

455

685

85

130

Other Australia

5

Ahafo

480

480

810

960

60

40

Akyem

365

365

575

695

30

5

Ahafo North

25

Nevada Gold Mines d

1,375

1,375

690

880

185

45

Corporate/Other

30

Peñasquito - Co-products (GEO) e

880

880

560

890

Boddington - Co-product (GEO) e

130

130

910

1,105

Peñasquito - Zinc (Mlbs)

360

360

Peñasquito - Lead (Mlbs)

190

190

Peñasquito - Silver (Moz)

28

28

Boddington - Copper (Mlbs)

55

55

a 2020 outlook projections shown above are considered forward-looking statements and represent management’s good faith estimates or expectations of future production results as of July 30, 2020. Outlook is based upon certain assumptions, including, but not limited to, metal prices, oil prices, certain exchange rates and other assumptions. For example, 2020 Outlook assumes $1,200/oz gold, $16/oz silver, $2.75/lb copper, $1.20/lb zinc, $0.95/lb lead, $0.75 USD/AUD exchange rate, $0.77 USD/CAD exchange rate and $60/barrel WTI; AISC and CAS estimates do not include inflation, for the remainder of the year. Production, CAS, AISC and capital estimates exclude projects that have not yet been approved. The potential impact on inventory valuation as a result of lower prices, input costs, and project decisions are not included as part of this Outlook. Assumptions used for purposes of Outlook may prove to be incorrect and actual results may differ from those anticipated, including variation beyond a +/-5% range. Outlook cannot be guaranteed. As such, investors are cautioned not to place undue reliance upon Outlook and forward-looking statements as there can be no assurance that the plans, assumptions or expectations upon which they are placed will occur. Amounts may not recalculate to totals due to rounding. See cautionary at the end of this release.

b All-in sustaining costs or AISC as used in the Company’s Outlook is a non-GAAP metric; see below for further information and reconciliation to consolidated 2020 CAS outlook.

c Consolidated production for Yanacocha and Merian is presented on a total production basis for the mine site; attributable production represents a 51.35% interest for Yanacocha and a 75% interest for Merian.

d Represents the ownership interest in the Nevada Gold Mines (NGM) joint venture. NGM is owned 38.5% by Newmont and owned 61.5% and operated by Barrick. The Company accounts for its interest in NGM using the proportionate consolidation method, thereby recognizing its pro-rata share of the assets, liabilities and operations of NGM.

e Gold equivalent ounces (GEO) is calculated as pounds or ounces produced multiplied by the ratio of the other metal’s price to the gold price, using Gold ($1,200/oz.), Copper ($2.75/lb.), Silver ($16/oz.), Lead ($0.95/lb.), and Zinc ($1.20/lb.) pricing.

Three Months Ended June 30,

Six Months Ended June 30,

Operating Results

2020

2019

% Change

2020

2019

% Change

Attributable Sales (koz)

Attributable gold ounces sold 1

1,198

1,539

(22)

%

2,567

2,774

(7)

%

Attributable gold equivalent ounces sold

213

93

129

%

532

144

269

%

Average Realized Price ($/oz, $/lb)

Average realized gold price

$

1,724

$

1,317

31

%

$

1,652

$

1,310

26

%

Average realized copper price

$

2.91

$

2.48

17

%

$

2.21

$

2.68

(18)

%

Average realized silver price

$

14.70

$

14.20

4

%

$

14.35

$

14.20

1

%

Average realized lead price

$

0.75

$

0.76

(1)

%

$

0.68

$

0.76

(11)

%

Average realized zinc price

$

0.70

$

%

$

0.65

$

%

Attributable Production (koz)

North America 2

232

251

(8)

%

608

332

83

%

South America 2

136

260

(48)

%

371

445

(17)

%

Australia

294

359

(18)

%

552

699

(21)

%

Africa

193

277

(30)

%

379

508

(25)

%

Nevada 3

326

365

(11)

%

655

758

(14)

%

Total Gold (excluding equity method investments)

1,181

1,512

(22)

%

2,565

2,742

(6)

%

Pueblo Viejo (40%) 4

74

75

(1)

%

169

75

125

%

Total Gold

1,255

1,587

(21)

%

2,734

2,817

(3)

%

North America

108

53

104

%

418

53

689

%

Australia

30

40

(25)

%

59

71

(17)

%

Nevada

18

(100)

%

35

(100)

%

Total Gold Equivalent Ounces

138

111

24

%

477

159

200

%

CAS Consolidated ($/oz, $/GEO)

North America

$

735

$

1,031

(29)

%

$

811

$

1,002

(19)

%

South America

$

781

$

651

20

%

$

796

$

618

29

%

Australia

$

719

$

724

(1)

%

$

724

$

740

(2)

%

Africa

$

696

$

602

16

%

$

715

$

598

20

%

Nevada

$

797

$

803

(1)

%

$

765

$

785

(3)

%

Total Gold

$

748

$

759

(1)

%

$

766

$

733

5

%

Total Gold (by-product)

$

684

$

772

(11)

%

$

711

$

732

(3)

%

North America

$

505

$

1,952

(74)

%

$

551

$

1,952

(72)

%

Australia

$

874

$

807

8

%

$

843

$

852

(1)

%

Nevada

$

$

871

(100)

%

$

$

810

(100)

%

Total Gold Equivalent Ounces

$

555

$

1,308

(58)

%

$

583

$

1,146

(49)

%

AISC Consolidated ($/oz, $/GEO)

North America

$

1,162

$

1,383

(16)

%

$

1,105

$

1,302

(15)

%

South America

$

1,233

$

827

49

%

$

1,087

...

$

780

39

%

Australia

$

907

$

890

2

%

$

927

$

894

4

%

Africa

$

877

$

810

8

%

$

902

$

794

14

%

Nevada

$

979

$

1,002

(2)

%

$

953

$

976

(2)

%

Total Gold

$

1,097

$

1,016

8

%

$

1,061

$

967

10

%

Total Gold (by-product)

$

1,104

$

1,047

5

%

$

1,070

$

979

9

%

North America

$

960

$

2,536

(62)

%

$

888

$

2,536

(65)

%

Australia

$

1,068

$

957

12

%

$

1,051

$

997

5

%

Nevada

$

$

1,037

(100)

%

$

$

959

(100)

%

Total Gold Equivalent Ounces

$

974

$

1,646

(41)

%

$

906

$

1,413

(36)

%

1 Attributable gold ounces from the Pueblo Viejo mine, an equity method investment, are not included in attributable gold ounces sold. 2 Includes sites acquired as part of the Newmont Goldcorp transaction, effective April 18, 2019. 3 Newmont contributed its existing Nevada mining operations in exchange for a 38.5% interest in NGM, effective July 1, 2019. 4 Represents attributable gold from Pueblo Viejo and does not include the Company's other equity method investments. Attributable gold ounces produced at Pueblo Viejo are not included in attributable gold ounces sold, as noted in footnote 1. Income and expenses of equity method investments are included in Equity income (loss) of affiliates.

NEWMONT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in millions except per share)

Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

2020

2019

Sales

$

2,365

$

2,257

$

4,946

$

4,060

Costs and expenses

Costs applicable to sales (1)

1,058

1,366

2,390

2,344

Depreciation and amortization

528

487

1,093

799

Reclamation and remediation

40

73

78

103

Exploration

26

69

70

110

Advanced projects, research and development

26

32

53

59

General and administrative

72

81

137

140

Care and maintenance

125

145

Other expense, net

59

137

92

205

1,934

2,245

4,058

3,760

Other income (expense):

Gain on asset and investment sales, net

(1

)

32

592

33

Other income, net

198

58

9

102

Interest expense, net of capitalized interest

(78

)

(82

)

(160

)

(140

)

119

8

441

(5

)

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

550

20

1,329

295

Income and mining tax benefit (expense)

(164

)

(20

)

(141

)

(145

)

Equity income (loss) of affiliates

29

26

66

21

Net income (loss) from continuing operations

415

26

1,254

171

Net income (loss) from discontinued operations

(68

)

(26

)

(83

)

(52

)

Net income (loss)

347

1,171

119

Net loss (income) attributable to noncontrolling interests

(3

)

(25

)

(5

)

(57

)

Net income (loss) attributable to Newmont stockholders

$

344

$

(25

)

$

1,166

$

62

Net income (loss) attributable to Newmont stockholders:

Continuing operations

$

412

$

1

$

1,249

$

114

Discontinued operations

(68

)

(26

)

(83

)

(52

)

$

344

$

(25

)

$

1,166

$

62

Net income (loss) per common share

Basic:

Continuing operations

$

0.51

$

$

1.55

$

0.18

Discontinued operations

(0.08

)

(0.03

)

(0.10

)

(0.08

)

$

0.43

$

(0.03

)

$

1.45

$

0.10

Diluted:

Continuing operations

$

0.51

$

$

1.55

$

0.18

Discontinued operations

(0.08

)

(0.03

)

(0.10

)

(0.08

)

$

0.43

$

(0.03

)

$

1.45

$

0.10

(1) Excludes Depreciation and amortization and Reclamation and remediation.

NEWMONT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)

Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

2020

2019

Operating activities:

Net income (loss)

$

347

$

$

1,171

$

119

Adjustments:

Depreciation and amortization

528

487

1,093

799

Stock-based compensation

17

35

38

54

Reclamation and remediation

37

68

72

95

Net loss (income) from discontinued operations

68

26

83

52

Deferred income taxes

(26

)

(34

)

(144

)

(13

)

Gain on asset and investment sales, net

1

(32

)

(592

)

(33

)

Impairment of investments

93

1

Change in fair value of investments

(227

)

(35

)

(134

)

(56

)

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

37

60

37

104

Charges from debt extinguishment

3

77

Other operating adjustments

28

(5

)

(69

)

12

Net change in operating assets and liabilities

(145

)

(269

)

(118

)

(259

)

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

668

301

1,607

875

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

(4

)

(2

)

(7

)

(5

)

Net cash provided by (used in) operating activities

664

299

1,600

870

Investing activities:

Proceeds from sales of mining operations and other assets, net

14

27

1,135

29

Additions to property, plant and mine development

(280

)

(380

)

(608

)

(605

)

Proceeds from sales of investments

6

53

270

56

Return of investment from equity method investees

80

43

80

Purchases of investments

(21

)

(33

)

(33

)

(86

)

Acquisitions, net (1)

121

121

Other

(3

)

28

32

26

Net cash provided by (used in) investing activities

(284

)

(104

)

839

(379

)

Financing activities:

Repayment of debt

(90

)

(1,250

)

(1,160

)

(1,250

)

Proceeds from issuance of debt, net

985

Repurchases of common stock

(321

)

Dividends paid to common stockholders

(201

)

(590

)

(313

)

(666

)

Distributions to noncontrolling interests

(42

)

(49

)

(88

)

(93

)

Funding from noncontrolling interests

27

20

55

46

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

(3

)

(6

)

(39

)

(45

)

Payments on lease and other financing obligations

(17

)

(16

)

(33

)

(26

)

Other

35

(2

)

37

(2

)

Net cash provided by (used in) financing activities

(291

)

(1,893

)

(877

)

(2,036

)

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

4

1

(2

)

Net change in cash, cash equivalents and restricted cash

93

(1,697

)

1,562

(1,547

)

Cash, cash equivalents and restricted cash at beginning of period

3,639

2,349

3,489

Cash, cash equivalents and restricted cash at end of period

$

93

$

1,942

$

3,911

$

1,942

Reconciliation of cash, cash equivalents and restricted cash:

Cash and cash equivalents

$

3,808

$

1,827

$

3,808

$

1,827

Restricted cash included in Other current assets

30

30

Restricted cash included in Other non-current assets

103

85

103

85

Total cash, cash equivalents and restricted cash

$

3,911

$

1,942

$

3,911

$

1,942

(1)

Acquisitions, net for the three and six months ended June 30, 2019 is comprised of $138 cash and cash equivalents acquired in the Newmont Goldcorp transaction, net of $17 cash paid to Goldcorp shareholders as part of the purchase consideration.

NEWMONT CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in millions)

At June 30,
2020

At December 31, 2019

ASSETS

Cash and cash equivalents

$

3,808

$

2,243

Trade receivables

255

373

Investments

310

237

Inventories

961

1,014

Stockpiles and ore on leach pads

836

812

Other current assets

514

570

Current assets held for sale

1,023

Current assets

6,684

6,272

Property, plant and mine development, net

24,676

25,276

Investments

3,003

3,199

Stockpiles and ore on leach pads

1,625

1,484

Deferred income tax assets

530

549

Goodwill

2,771

2,674

Other non-current assets

596

520

Total assets

$

39,885

$

39,974

LIABILITIES

Accounts payable

$

473

$

539

Employee-related benefits

288

361

Income and mining taxes payable

204

162

Lease and other financing obligations

98

100

Debt

552

Other current liabilities

763

880

Current liabilities held for sale

343

Current liabilities

2,378

2,385

Debt

5,478

6,138

Lease and other financing obligations

550

596

Reclamation and remediation liabilities

3,550

3,464

Deferred income tax liabilities

2,273

2,407

Employee-related benefits

454

448

Silver streaming agreement

1,036

1,058

Other non-current liabilities

1,195

1,061

Total liabilities

16,914

17,557

Contingently redeemable noncontrolling interest

43

47

EQUITY

Common stock

1,291

1,298

Treasury stock

(159

)

(120

)

Additional paid-in capital

18,130

18,216

Accumulated other comprehensive income (loss)

(247

)

(265

)

Retained earnings

2,989

2,291

Newmont stockholders' equity

22,004

21,420

Noncontrolling interests

924

950

Total equity

22,928

22,370

Total liabilities and equity

$

39,885

$

39,974

Non-GAAP Financial Measures

Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by U.S. generally accepted accounting principles ("GAAP"). These measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Unless otherwise noted, we present the Non-GAAP financial measures of our continuing operations in the tables below. For additional information regarding our discontinued operations, see Note 13 to the Condensed Consolidated Financial Statements.

Adjusted net income (loss)

Management uses Adjusted net income (loss) to evaluate the Company’s operating performance and for planning and forecasting future business operations. The Company believes the use of Adjusted net income (loss) allows investors and analysts to understand the results of the continuing operations of the Company and its direct and indirect subsidiaries relating to the sale of products, by excluding certain items that have a disproportionate impact on our results for a particular period. Adjustments to continuing operations are presented before tax and net of our partners’ noncontrolling interests, when applicable. The tax effect of adjustments is presented in the Tax effect of adjustments line and is calculated using the applicable regional tax rate. Management’s determination of the components of Adjusted net income (loss) are evaluated periodically and based, in part, on a review of non-GAAP financial measures used by mining industry analysts. Net income (loss) attributable to Newmont stockholders is reconciled to Adjusted net income (loss) as follows:

Three Months Ended
June 30, 2020

Six Months Ended
June 30, 2020

per share data (1)

per share data (1)

basic

diluted

basic

diluted

Net income (loss) attributable to Newmont stockholders

$

344

$

0.43

$

0.43

$

1,166

$

1.45

$

1.45

Net loss (income) attributable to Newmont stockholders from discontinued operations (2)

68

0.08

0.08

83

0.10

0.10

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

412

0.51

0.51

1,249

1.55

1.55

(Gain) loss on asset and investment sales (3)

1

(592

)

(0.73

)

(0.73

)

Change in fair value of investments (4)

(227

)

(0.28

)

(0.28

)

(134

)

(0.17

)

(0.17

)

Impairment of investments (5)

93

0.11

0.11

Loss on debt extinguishment (6)

3

77

0.09

0.09

COVID-19 specific costs (7)

33

0.04

0.04

35

0.04

0.04

Goldcorp transaction and integration costs (8)

7

0.01

0.01

23

0.03

0.03

Restructuring and other (9)

5

0.01

0.01

12

0.01

0.01

Impairment of long-lived assets (10)

5

0.01

0.01

5

0.01

0.01

Tax effect of adjustments (11)

32

0.04

0.03

125

0.17

0.17

Valuation allowance and other tax adjustments, net (12)

(10

)

(0.01

)

(0.01

)

(306

)

(0.38

)

(0.38

)

Adjusted net income (loss) (13)

$

261

$

0.33

$

0.32

$

587

$

0.73

$

0.73

Weighted average common shares (millions): (14)

803

805

805

806

(1)

Per share measures may not recalculate due to rounding.

(2)

For additional information regarding our discontinued operations, see Note 13 to our Condensed Consolidated Financial Statements.

(3)

(Gain) loss on asset and investment sales, included in Gain on asset and investment sales, net, primarily represents a $493 gain on the sale of Kalgoorlie in January 2020, a $91 gain on the sale of Continental and a $9 gain on the sale of Red Lake in March 2020. For additional information, see Note 9 to our Condensed Consolidated Financial Statements.

(4)

Change in fair value of investments, included in Other income, net, primarily represents unrealized holding gains and losses on marketable equity securities and our investment instruments. For additional information regarding our investments, see Note 19 to our Condensed Consolidated Financial Statements.

(5)

Impairment of investments, included in Other income, net, primarily represents the other-than-temporary impairment of the TMAC investment recorded in March 2020.

(6)

Loss on debt extinguishment, included in Other income, net, primarily represents losses on the extinguishment of a portion of the 2022 Senior Notes and 2023 Senior Notes during March and April 2020.

(7)

COVID-19 specific costs, included in Other expense, net, represents incremental direct costs incurred as a result of actions taken to protect against the impacts of the COVID-19 pandemic.

(8)

Goldcorp transaction and integration costs, included in Other expense, net, primarily represents costs incurred related to the Newmont Goldcorp transaction completed during 2019 as well as subsequent integration costs.

(9)

Restructuring and other, included in Other expense, net, primarily represents certain costs associated with severance, legal and other settlements of $4 and $11, respectively. Restructuring and other, included in Other income, net, primarily represents pension settlements of $2 and $2, respectively. Amounts are presented net of income (loss) attributable to noncontrolling interests of $(1) and $(1), respectively.

(10)

Impairment of long-lived assets, included in Other expense, net, represents non-cash write-downs of long-lived assets.

(11)

The tax effect of adjustments, included in Income and mining tax benefit (expense), represents the tax effect of adjustments in footnotes (3) through (10), as described above, and are calculated using the applicable regional tax rate.

(12)

Valuation allowance and other tax adjustments, net, included in Income and mining tax benefit (expense), is recorded for items such as foreign tax credits, alternative minimum tax credits, capital losses, disallowed foreign losses, and the effects of changes in foreign currency exchange rates on deferred tax assets and deferred tax liabilities. The adjustment for the three and six months ended June 30, 2020 is due to a net increase or (decrease) to net operating losses, tax credit carryovers and other deferred tax assets subject to valuation allowance of $(11) and $(120), respectively, the effects of changes in foreign exchange rates on deferred tax assets and liabilities of $(8) and $(187), respectively, changes to the reserve for uncertain tax positions of $15 and $(9), respectively, and other tax adjustments of $1 and $32, respectively. Total amount is presented net of income (loss) attributable to noncontrolling interests of $(7) and $(22), respectively.

(13)

Adjusted net income (loss) has not been adjusted for $115 and $133 of cash and $68 and $74 of non-cash care and maintenance costs, included in Care and maintenance and Depreciation and amortization, respectively, which primarily represent costs associated with our Musselwhite, Éléonore, Peñasquito, Yanacocha and Cerro Negro sites being temporarily placed into care and maintenance in response to the COVID-19 pandemic during a portion of the three and six months ended June 30, 2020, respectively. Amounts are presented net of income (loss) attributable to noncontrolling interests of $10, $12, $2 and $3, respectively.

(14)

Adjusted net income (loss) per diluted share is calculated using diluted common shares, which are calculated in accordance with U.S. GAAP.

Three Months Ended
June 30, 2019

Six Months Ended
June 30, 2019

per share data (1)

per share data (1)

basic

diluted

basic

diluted

Net income (loss) attributable to Newmont stockholders

$

(25

)

$

(0.03

)

$

(0.03

)

$

62

$

0.10

$

0.10

Net loss (income) attributable to Newmont stockholders from discontinued operations (2)

26

52

0.08

0.08

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

1

114

0.18

0.18

Goldcorp transaction and integration costs (3)

114

0.14

0.14

159

0.24

0.24

Change in fair value of investments (4)

(35

)

(0.05

)

(0.05

)

(56

)

(0.09

)

(0.09

)

Reclamation and remediation charges (5)

32

0.04

0.04

32

0.05

0.05

Loss (gain) on asset and investment sales, net (6)

(30

)

(0.04

)

(0.04

)

(31

)

(0.05

)

(0.05

)

Nevada JV transaction and integration costs (7)

11

0.02

0.02

23

0.05

0.05

Restructuring and other (8)

5

Impairment of long-lived assets (9)

1

Impairment of investments (10)

1

Tax effect of adjustments (11)

(5

)

(13

)

(0.02

)

(0.02

)

Valuation allowance and other tax adjustments, net (12)

4

0.01

0.01

33

0.05

0.05

Adjusted net income (loss)

$

92

$

0.12

$

0.12

$

268

$

0.41

$

0.41

Weighted average common shares (millions): (13)

766

768

651

652

(1)

Per share measures may not recalculate due to rounding.

(2)

For additional information regarding our discontinued operations, see Note 13 to our Condensed Consolidated Financial Statements.

(3)

Goldcorp transaction and integration costs, included in Other expense, net, primarily represents costs incurred related to the Newmont Goldcorp transaction during 2019.

(4)

Change in fair value of investments, included in Other income, net, primarily represents unrealized holding gains and losses on marketable equity securities and our investment instruments in Continental. For additional information regarding our investment, see Note 19 to our Condensed Consolidated Financial Statements.

(5)

Reclamation and remediation charges, included in Reclamation and remediation, represent revisions to remediation plans at the Company’s former historic mining operations, including adjustments related to a review of the project cost estimates at the Dawn remediation site and increased water management costs at the Con Mine.

(6)

Loss (gain) on asset and investment sales, included in Other income, net, primarily represents a gain on the sale of exploration property in North America in 2019. Amounts are presented net of income (loss) attributable to noncontrolling interest of $2 and $2, respectively.

(7)

Nevada JV transaction and integration costs, included in Other expense, net, primarily represents costs incurred related to the Nevada JV Agreement, including hostile defense fees, during 2019.

(8)

Restructuring and other, included in Other expense, net, primarily represents certain costs associated with severance, legal and other settlements.

(9)

Impairment of long-lived assets, included in Other expense, net, represents non-cash write-downs of long-lived assets.

(10)

Impairment of investments, included in Other income, net, represents other-than-temporary impairments of other investments.

(11)

The tax effect of adjustments, included in Income and mining tax benefit (expense), represents the tax effect of adjustments in footnotes (3) through (10), as described above, and are calculated using the applicable regional tax rate.

(12)

Valuation allowance and other tax adjustments, included in Income and mining tax benefit (expense), is recorded for items such as foreign tax credits, alternative minimum tax credits, capital losses and disallowed foreign losses. The adjustment is due to increases or (decreases) to net operating losses, tax credit carryovers and other deferred tax assets subject to valuation allowance of $(5) and $25 respectively, and other tax adjustments of $7 and $7, respectively. Amounts are presented net of income (loss) attributable to noncontrolling interests of $2 and $1, respectively.

(13)

Adjusted net income (loss) per diluted share is calculated using diluted common shares, which are calculated in accordance with U.S. GAAP.

Earnings before interest, taxes and depreciation and amortization and Adjusted earnings before interest, taxes and depreciation and amortization

Management uses Earnings before interest, taxes and depreciation and amortization ("EBITDA") and EBITDA adjusted for non-core or certain items that have a disproportionate impact on our results for a particular period ("Adjusted EBITDA") as non-GAAP measures to evaluate the Company’s operating performance. EBITDA and Adjusted EBITDA do not represent, and should not be considered an alternative to, net income (loss), operating income (loss), or cash flow from operations as those terms are defined by GAAP, and do not necessarily indicate whether cash flows will be sufficient to fund cash needs. Although Adjusted EBITDA and similar measures are frequently used as measures of operations and the ability to meet debt service requirements by other companies, our calculation of Adjusted EBITDA is not necessarily comparable to such other similarly titled captions of other companies. The Company believes that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors. Management’s determination of the components of Adjusted EBITDA are evaluated periodically and based, in part, on a review of non-GAAP financial measures used by mining industry analysts. Net income (loss) attributable to Newmont stockholders is reconciled to EBITDA and Adjusted EBITDA as follows:

Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

2020

2019

Net income (loss) attributable to Newmont stockholders

$

344

$

(25

)

$

1,166

$

62

Net income (loss) attributable to noncontrolling interests

3

25

5

57

Net loss (Income) from discontinued operations (1)

68

26

83

52

Equity loss (income) of affiliates

(29

)

(26

)

(66

)

(21

)

Income and mining tax expense (benefit)

164

20

141

145

Depreciation and amortization

528

487

1,093

799

Interest expense, net

78

82

160

140

EBITDA

$

1,156

$

589

$

2,582

$

1,234

Adjustments:

(Gain) loss on asset and investment sales (2)

1

(32

)

(592

)

(33

)

Change in fair value of investments (3)

(227

)

(35

)

(134

)

(56

)

Impairment of investments (4)

93

1

Loss on debt extinguishment (5)

3

77

COVID-19 specific costs (6)

33

35

Goldcorp transaction and integration costs (7)

7

114

23

159

Restructuring and other (8)

6

13

5

Impairment of long-lived assets (9)

5

5

1

Reclamation and remediation adjustments (10)

32

32

Nevada JV transaction and integration costs (11)

11

23

Adjusted EBITDA (12)

$

984

$

679

$

2,102

$

1,366

(1)

For additional information regarding our discontinued operations, see Note 13 to our Condensed Consolidated Financial Statements.

(2)

(Gain) loss on asset and investment sales, included in Gain on asset and investment sales, net, primarily represents a $493 gain on the sale of Kalgoorlie in January 2020, a $91 gain on the sale of Continental and a $9 gain on the sale of Red Lake in March 2020 and represents a gain on the sale of exploration land in 2019. For additional information, see Note 9 to our Condensed Consolidated Financial Statements.

(3)

Change in fair value of investments, included in Other income, net, primarily represents unrealized holding gains and losses on marketable equity securities and our investment instruments. For additional information regarding our investments, see Note 19 to our Condensed Consolidated Financial Statements.

(4)

Impairment of investments, included in Other income, net, primarily represents the other-than-temporary impairment of the TMAC investment recorded in March 2020.

(5)

Loss on debt extinguishment, included in Other income, net, primarily represents losses on the extinguishment of a portion of the 2022 Senior Notes and 2023 Senior Notes during March and April 2020.

(6)

COVID-19 specific costs, included in Other expense, net, represents incremental direct costs incurred as a result of actions taken to protect against the impacts of the COVID-19 pandemic.

(7)

Goldcorp transaction and integration costs, included in Other expense, net, primarily represents costs incurred related to the Newmont Goldcorp transaction completed during 2019 as well as subsequent integration costs.

(8)

Restructuring and other, included in Other expense, net, primarily represents certain costs associated with severance, legal and other settlements of $4, $—, $11 and $5, respectively. Restructuring and other, included in Other income, net, primarily represents pension settlements of $2, $—, $2 and $—, respectively.

(9)

Impairment of long-lived assets, included in Other expense, net, represents non-cash write-downs of long-lived assets.

(10)

Reclamation and remediation charges, included in Reclamation and remediation, represent revisions to remediation plans at the Company’s former historic mining operations in 2019.

(11)

Nevada JV transaction and integration costs, included in Other expense, net, primarily represents costs incurred related to the Nevada JV Agreement, including hostile defense fees, during 2019.

(12)

Adjusted EBITDA has not been adjusted for $125 and $145 of cash care and maintenance costs, included in Care and maintenance, which primarily represent costs incurred associated with our Musselwhite, Éléonore, Peñasquito, Yanacocha and Cerro Negro mine sites being temporarily placed into care and maintenance in response to the COVID-19 pandemic during a portion of the three and six months ended June 30, 2020, respectively.

The Company uses NGM EBITDA as a non-GAAP measure to evaluate the operating performance of its investment in Nevada Gold Mines (NGM). NGM EBITDA does not represent, and should not be considered an alternative to, Income (loss) before income and mining tax and other items, as defined by GAAP, and does not necessarily indicate whether cash distributions from NGM will match NGM EBITDA. Although the Company has the ability to exert significant influence and proportionally consolidates its 38.5% interest in NGM, it does not have direct control over the operations or resulting revenues and expenses of its investment in NGM. The Company believes that NGM EBITDA provides useful information to investors and others in understanding and evaluating the operating results of its investment in NGM, in the same manner as management and the Board of Directors. Income (loss) before income and mining tax and other items is reconciled to NGM EBITDA as follows:

Three Months Ended June 30, 2020

Six Months Ended
June 30, 2020

Income (Loss) before Income and Mining Tax and other Items, NGM (1)

$

130

$

263

Depreciation and amortization (1)

147

278

NGM EBITDA

$

277

$

541

(1)

See Note 4 to the Condensed Consolidated Financial Statements

Free Cash Flow

Management uses Free Cash Flow as a non-GAAP measure to analyze cash flows generated from operations. Free Cash Flow is Net cash provided by (used in) operating activities less Net cash provided by (used in) operating activities of discontinued operations less Additions to property, plant and mine development as presented on the Condensed Consolidated Statements of Cash Flows. The Company believes Free Cash Flow is also useful as one of the bases for comparing the Company’s performance with its competitors. Although Free Cash Flow and similar measures are frequently used as measures of cash flows generated from operations by other companies, the Company’s calculation of Free Cash Flow is not necessarily comparable to such other similarly titled captions of other companies.

The presentation of non-GAAP Free Cash Flow is not meant to be considered in isolation or as an alternative to net income as an indicator of the Company’s performance, or as an alternative to cash flows from operating activities as a measure of liquidity as those terms are defined by GAAP, and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. The Company’s definition of Free Cash Flow is limited in that it does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations or payments made for business acquisitions. Therefore, the Company believes it is important to view Free Cash Flow as a measure that provides supplemental information to the Company’s Condensed Consolidated Statements of Cash Flows.

The following table sets forth a reconciliation of Free Cash Flow, a non-GAAP financial measure, to Net cash provided by (used in) operating activities, which the Company believes to be the GAAP financial measure most directly comparable to Free Cash Flow, as well as information regarding Net cash provided by (used in) investing activities and Net cash provided by (used in) financing activities.

Three Months Ended
June 30,

Six Months Ended
June 30,

2020

2019

2020

2019

Net cash provided by (used in) operating activities

$

664

$

299

$

1,600

$

870

Less: Net cash used in (provided by) operating activities of discontinued operations

4

2

7

5

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

668

301

1,607

875

Less: Additions to property, plant and mine development

(280

)

(380

)

(608

)

(605

)

Free Cash Flow

$

388

$

(79

)

$

999

$

270

Net cash provided by (used in) investing activities (1)

$

(284

)

$

(104

)

$

839

$

(379

)

Net cash provided by (used in) financing activities

$

(291

)

$

(1,893

)

$

(877

)

$

(2,036

)

(1)

Net cash provided by (used in) investing activities includes Additions to property, plant and mine development, which is included in the Company’s computation of Free Cash Flow.​

Costs applicable to sales per ounce/gold equivalent ounce

Costs applicable to sales per ounce/gold equivalent ounce are non-GAAP financial measures. These measures are calculated by dividing the costs applicable to sales of gold and other metals by gold ounces or gold equivalent ounces sold, respectively. These measures are calculated for the periods presented on a consolidated basis. Costs applicable to sales per ounce/gold equivalent ounce statistics are intended to provide additional information only and do not have any standardized meaning prescribed by GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The measures are not necessarily indicative of operating profit or cash flow from operations as determined under GAAP. Other companies may calculate these measures differently.

The following tables reconcile these non-GAAP measures to the most directly comparable GAAP measures.

Costs applicable to sales per ounce

Three Months Ended
June 30,

Six Months Ended
June 30,

2020

2019

2020

2019

Costs applicable to sales (1)(2)

$

940

$

1,245

$

2,080

$

2,180

Gold sold (thousand ounces)

1,255

1,636

2,715

2,974

Costs applicable to sales per ounce (3)

$

748

$

759

$

766

$

733

(1)

Includes by-product credits of $20 and $44 during the three and six months ended June 30, 2020, respectively, and $21 and $29 during the three and six months ended June 30, 2019, respectively.

(2)

Excludes Depreciation and amortization and Reclamation and remediation.

(3)

Per ounce measures may not recalculate due to rounding.

Costs applicable to sales per gold equivalent ounce

Three Months Ended
June 30,

Six Months Ended
June 30,

2020

2019

2020

2019

Costs applicable to sales (1)(2)

$

118

$

121

$

310

$

164

Gold equivalent ounces - other metals (thousand ounces) (3)

213

93

532

144

Costs applicable to sales per ounce (4)

$

555

$

1,308

$

583

$

1,146

(1)

Includes by-product credits of $1 and $1 during the three and six months ended June 30, 2020, respectively, and $2 and $2 during the three and six months ended June 30, 2019, respectively.

(2)

Excludes Depreciation and amortization and Reclamation and remediation.

(3)

Gold equivalent ounces is calculated as pounds or ounces produced multiplied by the ratio of the other metals price to the gold price, using Gold ($1,200/oz.), Copper ($2.75/lb.), Silver $16/oz.), Lead ($0.95/lb.) and Zinc ($1.20/lb.) pricing for 2020 and Gold ($1,200/oz.), Copper ($2.75/lb.), Silver ($15/oz.), Lead ($0.90/lb.) and Zinc ($1.05/lb.) pricing for 2019.

(4)

Per ounce measures may not recalculate due to rounding.​

Costs applicable to sales per ounce for Nevada Gold Mines (NGM)

Three Months Ended June 30, 2020

Six Months Ended
June 30, 2020

Cost applicable to sales, NGM (1)(2)

$

260

$

503

Gold sold (thousand ounces), NGM

325

657

Costs applicable to sales per ounce, NGM (3)

$

797

$

765

(1)

See Note 4 to the Condensed Consolidated Financial Statements

(2)

Excludes Depreciation and amortization and Reclamation and remediation.

(3)

Per ounce measures may not recalculate due to rounding.

All-In Sustaining Costs

Newmont has developed a metric that expands on GAAP measures, such as cost of goods sold, and non-GAAP measures, such as costs applicable to sales per ounce, to provide visibility into the economics of our mining operations related to expenditures, operating performance and the ability to generate cash flow from our continuing operations.

Current GAAP measures used in the mining industry, such as cost of goods sold, do not capture all of the expenditures incurred to discover, develop and sustain production. Therefore, we believe that all-in sustaining costs is a non-GAAP measure that provides additional information to management, investors and analysts that aid in the understanding of the economics of our operations and performance compared to other producers and provides investors visibility by better defining the total costs associated with production.

All-in sustaining cost ("AISC") amounts are intended to provide additional information only and do not have any standardized meaning prescribed by GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The measures are not necessarily indicative of operating profit or cash flow from operations as determined under GAAP. Other companies may calculate these measures differently as a result of differences in the underlying accounting principles, policies applied and in accounting frameworks such as in International Financial Reporting Standards ("IFRS"), or by reflecting the benefit from selling non-gold metals as a reduction to AISC. Differences may also arise related to definitional differences of sustaining versus development (i.e. non-sustaining) activities based upon each company’s internal policies.

The following disclosure provides information regarding the adjustments made in determining the all-in sustaining costs measure:

Costs applicable to sales. Includes all direct and indirect costs related to current production incurred to execute the current mine plan. We exclude certain exceptional or unusual amounts from Costs applicable to sales ("CAS"), such as significant revisions to recovery amounts. CAS includes by-product credits from certain metals obtained during the process of extracting and processing the primary ore-body. CAS is accounted for on an accrual basis and excludes Depreciation and amortization and Reclamation and remediation, which is consistent with our presentation of CAS on the Condensed Consolidated Statements of Operations. In determining AISC, only the CAS associated with producing and selling an ounce of gold is included in the measure. Therefore, the amount of gold CAS included in AISC is derived from the CAS presented in the Company’s Condensed Consolidated Statements of Operations less the amount of CAS attributable to the production of other metals at our Peñasquito, Boddington, and Phoenix mines. The other metals CAS at those mine sites is disclosed in Note 4 to the Condensed Consolidated Financial Statements. The allocation of CAS between gold and other metals at the Peñasquito, Boddington, and Phoenix mines is based upon the relative sales value of gold and other metals produced during the period.

Reclamation costs. Includes accretion expense related to reclamation liabilities and the amortization of the related Asset Retirement Cost ("ARC") for the Company’s operating properties. Accretion related to the reclamation liabilities and the amortization of the ARC assets for reclamation does not reflect annual cash outflows but are calculated in accordance with GAAP. The accretion and amortization reflect the periodic costs of reclamation associated with current production and are therefore included in the measure. The allocation of these costs to gold and other metals is determined using the same allocation used in the allocation of CAS between gold and other metals at the Peñasquito, Boddington, and Phoenix mines.

Advanced projects, research and development and exploration. Includes incurred expenses related to projects that are designed to sustain current production and exploration. We note that as current resources are depleted, exploration and advanced projects are necessary for us to replace the depleting reserves or enhance the recovery and processing of the current reserves to sustain production at existing operations. As these costs relate to sustaining our production, and are considered a continuing cost of a mining company, these costs are included in the AISC measure. These costs are derived from the Advanced projects, research and development and Exploration amounts presented in the Condensed Consolidated Statements of Operations less incurred expenses related to the development of new operations, or related to major projects at existing operations where these projects will materially benefit the operation in the future. The allocation of these costs to gold and other metals is determined using the same allocation used in the allocation of CAS between gold and other metals at the Peñasquito, Boddington, and Phoenix mines.

General and administrative. Includes costs related to administrative tasks not directly related to current production, but rather related to support our corporate structure and fulfill our obligations to operate as a public company. Including these expenses in the AISC metric provides visibility of the impact that general and administrative activities have on current operations and profitability on a per ounce basis.

Care and maintenance and Other expense, net. Care and maintenance includes direct operating and development capital costs incurred at the mine sites during the period that these sites were temporarily placed into care and maintenance in response to the COVID-19 pandemic. For Other expense, net we exclude certain exceptional or unusual expenses, such as restructuring, as these are not indicative to sustaining our current operations. Furthermore, this adjustment to Other expense, net is also consistent with the nature of the adjustments made to Net income (loss) attributable to Newmont stockholders as disclosed in the Company’s non-GAAP financial measure Adjusted net income (loss). The allocation of these costs to gold and other metals is determined using the same allocation used in the allocation of CAS between gold and other metals at the Peñasquito, Boddington, and Phoenix mines.

Treatment and refining costs. Includes costs paid to smelters for treatment and refining of our concentrates to produce the salable metal. These costs are presented net as a reduction of Sales on our Condensed Consolidated Statements of Operations. The allocation of these costs to gold and other metals is determined using the same allocation used in the allocation of CAS between gold and other metals at the Peñasquito, Boddington, and Phoenix mines.

Sustaining capital and finance lease payments. We determined sustaining capital and finance lease payments as those capital expenditures and finance lease payments that are necessary to maintain current production and execute the current mine plan. We determined development (i.e. non-sustaining) capital expenditures and finance lease payments to be those payments used to develop new operations or related to projects at existing operations where those projects will materially benefit the operation and are excluded from the calculation of AISC. The classification of sustaining and development capital projects and finance leases is based on a systematic review of our project portfolio in light of the nature of each project. Sustaining capital and finance lease payments are relevant to the AISC metric as these are needed to maintain the Company’s current operations and provide improved transparency related to our ability to finance these expenditures from current operations. The allocation of these costs to gold and other metals is determined using the same allocation used in the allocation of CAS between gold and other metals at the Peñasquito, Boddington, and Phoenix mines.

Three Months Ended
June 30, 2020

Costs Applicable to Sales(1)(2)(3)

Reclamation Costs(4)

Advanced Projects, Research and Development and Exploration(5)

General and Administrative

Care and Maintenance and Other Expense, Net(6)(7)

Treatment and Refining Costs

Sustaining Capital and Lease Related Costs(8)(9)

All-In Sustaining Costs

Ounces (000) Sold

All-In Sustaining Costs Per oz.(10)(11)

Gold

CC&V

$

59

$

2

$

1

$

$

$

$

11

$

73

64

$

1,132

Musselwhite

2

1

19

2

24

N.M.

Porcupine

58

1

4

8

71

87

800

Éléonore

13

1

1

20

3

38

13

2,832

Peñasquito

50

1

19

7

2

79

84

949

Other North America

(2

)

5

1

1

5

North America

182

5

5

5

59

7

27

290

248

1,162

Yanacocha

62

12

22

4

100

67

1,484

Merian

72

1

2

1

8

84

101

833

Cerro Negro

21

(2

)

31

6

56

30

1,838

Other South America

3

1

4

South America

155

13

4

54

18

244

198

1,233

Boddington

142

3

1

2

22

170

159

1,068

Tanami

62

1

2

19

84

125

672

Other Australia

2

2

4

Australia

204

4

3

2

2

43

258

284

907

Ahafo

84

2

1

1

19

107

106

1,008

Akyem

55

5

1

1

5

67

94

713

Other Africa

1

1

Africa

139

7

2

1

2

24

175

200

877

Nevada Gold Mines

260

4

4

2

1

4

44

319

325

979

Nevada

260

4

4

2

1

4

44

319

325

979

Corporate and Other

17

58

1

15

91

Total Gold

$

940

$

33

$

31

$

72

$

117

$

13

$

171

$

1,377

1,255

$

1,097

Gold equivalent ounces - other metals (12)

Peñasquito

$

93

$

2

$

$

$

18

$

37

$

27

$

177

185

$

960

Boddington

25

1

1

4

31

28

1,068

Total Gold Equivalent Ounces

$

118

$

3

$

$

$

18

$

38

$

31

$

208

213

$

974

Consolidated

$

1,058

$

36

$

31

$

72

$

135

$

51

$

202

$

1,585

(1)

Excludes Depreciation and amortization and Reclamation and remediation.

(2)

Includes by-product credits of $21 and excludes co-product revenues of $199.

(3)

Includes stockpile and leach pad inventory adjustments of $11 at NGM.

(4)

Reclamation costs include operating accretion and amortization of asset retirement costs of $23 and $13, respectively, and exclude non-operating accretion and reclamation and remediation adjustments of $13 and $4, respectively.

(5)

Advanced projects, research and development and Exploration excludes development expenditures of $2 at CC&V, $1 at Yanacocha, $2 at Merian, $(4) at Cerro Negro, $5 at Other South America, $1 at Tanami, $4 at Other Australia, $3 at Ahafo and $7 at NGM, totaling $21 related to developing new operations or major projects at existing operations where these projects will materially benefit the operation.

(6)

Care and maintenance includes $20 at Musselwhite, $20 at Éléonore, $38 at Peñasquito, $21 at Yanacocha, $25 at Cerro Negro and $1 at Other South America of cash care and maintenance costs associated with the sites temporarily being placed into care and maintenance in response to the COVID-19 pandemic, during the period ended June 30, 2020 that we would have continued to incur if the site were not temporarily placed into care and maintenance.

(7)

Other expense, net is adjusted for incremental costs of responding to the COVID-19 pandemic of $33, Goldcorp transaction and integration costs of $7, impairment of long-lived assets of $5 and restructuring and other costs of $4.

(8)

Includes sustaining capital expenditures of $40 for North America, $18 for South America, $45 for Australia, $24 for Africa, $44 for Nevada, and $15 for Corporate and Other, totaling $186 and excludes development capital expenditures, capitalized interest and the change in accrued capital totaling $94. The following are major development projects: Musselwhite Materials Handling, Éléonore Lower Mine Material Handling System, Quecher Main, Yanacocha Sulfides, Tanami Expansion 2, Subika Mining Method Change, Ahafo North, Goldrush Complex, Turquoise Ridge 3rd shaft and Range Front Declines at Cortez.

(9)

Includes finance lease payments for sustaining projects of $16.

(10)

Per ounce measures may not recalculate due to rounding.

(11)

N.M. – Not meaningful

(12)

Gold equivalent ounces is calculated as pounds or ounces produced multiplied by the ratio of the other metals price to the gold price, using Gold ($1,200/oz.), Copper ($2.75/lb.), Silver $16.00/oz.), Lead ($0.95/lb.) and Zinc ($1.20/lb.) pricing for 2020.

Three Months Ended
June 30, 2019

Costs

Applicable

to

Sales (1)(2)(3)

Reclamation

Costs (4)

Advanced

Projects,

Research and

Development

and

Exploration(5)

General
and
Administrative

Other

Expense,

Net (6)

Treatment
and
Refining
Costs

Sustaining

Capital (7)

All-In
Sustaining
Costs

Ounces (000)
Sold

All-In

Sustaining

Costs per

oz. (8)

Gold

CC&V

$

77

$

2

$

2

$

$

1

$

$

12

$

94

82

$

1,144

Red Lake

43

3

14

60

37

1,621

Musselwhite

12

3

4

19

6

3,307

Porcupine

63

1

2

10

76

59

1,288

Éléonore

75

2

1

12

90

84

1,073

Peñasquito

27

7

34

19

1,775

Other North America

1

20

3

24

North America

297

3

13

20

1

1

62

397

287

1,383

Yanacocha

100

14

2

5

8

129

135

955

Merian

71

1

1

1

12

86

124

696

Cerro Negro

63

1

2

1

13

80

100

802

Other South America

2

2

South America

234

16

5

3

6

33

297

359

827

Boddington

139

3

3

15

160

175

915

Tanami

65

1

1

21

88

118

744

Kalgoorlie

50

1

6

57

55

1,035

Other Australia

1

2

2

5

Australia

254

5

2

2

3

44

310

348

890

Ahafo

97

1

6

1

30

135

158

850

Akyem

70

9

1

1

7

88

119

734

Other Africa

2

2

Africa

167

10

7

2

2

37

225

277

810

Carlin

166

1

5

1

35

208

183

1,138

Phoenix

53

2