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Newmont Mining: Newmont Announces Third Quarter Operating And Financial Results

The following excerpt is from the company's SEC filing.

DENVER--(BUSINESS WIRE)--October 28, 2015--Newmont Mining Corporation (NYSE: NEM) (Newmont or the Company) announced third quarter results, including $813 million in operating cash flow, and $758 million in adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA)

Net income:

Achieved GAAP net income attributable to shareholders from continuing operations of $202 million, or $0.38 per share, compared to $210 million or $0.42 per share in the prior year quarter; adjusted net income

was $126 million, or $0.2 3 per share, compared to $249 million or $0.50 per share in the prior year quarter

Consolidated Adjusted EBITDA:

Delivered Adjusted EBITDA of $758 million in the third quarter, compared to $455 million in the prior year quarter

Consolidated cash flow:

Generated cash from continuing operations of $813 million compared to $328 million in the prior year quarter and free cash flow

from continuing operations of $478 million, compared to $51 million in the prior year quarter

All-in sustaining costs (AISC)

Improved gold AISC to $835 per ounce compared with $995 per ounce in the prior year quarter, and copper AISC to $1.54 per pound compared to $6.61 per pound in the prior year quarter

Costs applicable to sales (CAS):

Improved gold CAS to $608 per ounce compared with $705 per ounce in the prior year quarter, and copper CAS to $1.15 per pound compared to $5.73 per pound in the prior year quarter

Attributable production:

Delivered 1.34 million ounces and 48,000 tonnes of attributable gold and copper production, respectively, compared to 1.15 million ounces and 13,000 tonnes, respectively, in the prior year quarter

Outlook:

Improved 2015 cost outlook

as a result of cost and efficiency improvements, favorable oil prices and Australian dollar exchange rates, and some delayed spend; expect AISC of between $880 and $940 per ounce, and CAS of between $620 and $660 per ounce; attributable gold production maintained at between 4.7 and 5.1 million ounces

Portfolio:

Recently approved Tanami Expansion project reduces Tanami overall costs and improves Tanami production to between 425,000 and 475,000 ounces per year (first five years of expansion)

Shareholder returns:

Maintained third quarter dividend of $0.025 per share

“We delivered a 16 percent reduction in all-in sustaining costs and generated $758 million in adjusted EBITDA and $478 million in free cash flow – despite lower metal prices – through a sustained focus on improving costs and efficiency. The Cripple Creek & Victor integration process is underway and we are moving forward with our Tanami Expansion project in Australia, which is expected to generate an IRR of more than 35% in the current metal price environment. The project involves building a second decline in the underground mine and incremental capacity in the plant to increase profitable production and extend mine life,” said Gary Goldberg, President and Chief Executive Officer.

_______________________________________

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

Non-GAAP measure. Based on fully diluted shares outstanding. See end of release for reconciliation to net income.

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

Outlook constitutes forward-looking statements, which are subject to risk and uncertainties. See Cautionary Note.

Such policy is non-binding. Declaration of future dividends remains subject to approval and discretion of the Board of Directors.

Third Quarter Summary Results

attributable to shareholders from continuing operations was $202 million, or $0.38 per share, compared to $210 million or $0.42 per share a year ago. Adjusted net income was $126 million, or $0.23 per share, down from $249 million or $0.50 per share in the prior year quarter.

Consolidated cash flow from

was $813 million in the third quarter, compared to $328 million in the prior year quarter, as higher production, sales volumes and cost improvements more than offset the impact of lower metal prices. Free cash flow was $478 million in the third quarter, more than nine times the free cash flow of the prior year quarter.

Gold and copper AISC

was $835 per ounce and $1.54 per pound, respectively, compared with $995 per ounce and $6.61 per pound, respectively, in the prior year quarter. Gold and copper CAS were $608 per ounce and $1.15 per pound, respectively, compared with $705 per ounce and $5.73 per pound, respectively, in the third quarter of 2014. Unit costs benefitted from ongoing cost and efficiency improvements, lower fuel prices and favorable Australian dollar exchange rates, and improved sales volumes, particularly at Batu Hijau, Boddington and Tanami.

Revenue

totaled $2.0 billion compared to $1.7 billion in the third quarter of 2014 as higher production and sales volumes at Batu Hijau, Boddington and Tanami more than offset lower metal prices. During the third quarter of 2015, Batu Hijau mined higher grade ore and operated and shipped at full capacity. The prior year quarter was impacted by a temporary export ban.

Average net realized gold and copper price

was $1,104 per ounce and $1.95 per pound, respectively, compared with $1,270 per ounce and $2.71 per pound, respectively, in the prior year quarter.

Attributable gold production

totaled 1.34 million ounces, up 16% from the prior year quarter due to higher production at Batu Hijau, Tanami and Boddington, and the addition of Cripple Creek & Victor. Boddington production benefited from improved mill utilization as a result of Full Potential and higher grades. Tanami production was up from the prior year quarter due to higher grade ore and improved throughput. Including the pending sale of Waihi, Newmont has generated approximately $1.7 billion in fair value asset sales since 2013 while maintaining attributable gold production.

Attributable copper production

totaled 48,000 tonnes compared to 13,000 tonnes in the year ago period due to higher grade ore at Batu Hijau.

Capital expenditures

for the third quarter were $335 million, including $172 million of sustaining capital. Development capital was higher than the prior year primarily due to the construction of Merian in Suriname and Long Canyon Phase 1 in Nevada. Sustaining capital was lower year to date due to timing and continued cost improvements, resulting in a reduction of the full year forecast spend of about 13%. Long-term sustaining capital guidance remains at between $850 and $950 million.

Three Months Ended September 30,

Nine Months Ended September 30,

% Change

Attributable Sales (koz, Mlbs)

Attributable gold ounces sold

1,317

1,142

15

3,668

3,491

5

Attributable copper pounds sold

98

39

151

264

110

140

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

Average realized gold price

1,104

1,270

(13

1,159

1,282

(10

Average realized copper price

1.95

2.71

(28

2.21

2.75

(20

Attributable Production (koz, kt)

North America

434

428

1

1,216

1,235

(2

South America

141

136

4

411

364

13

Asia Pacific

572

377

52

1,558

1,310

19

Africa

193

213

(9

604

675

(11

Total Gold

16

6

43

8

438

111

42

164

Total Copper

269

119

CAS Consolidated ($/oz, $/lb)

750

773

(3

734

760

615

507

21

566

830

(32

533

913

(42

602

814

(26

527

436

488

444

10

(14

(16

2.13

(8

1.91

2.28

1.08

6.77

(84

1.16

4.24

(73

1.15

(80

(67

AISC Consolidated ($/oz, $/lb)

955

1,030

(7

942

1,007

(6

907

778

17

860

661

1,131

745

1,002

723

549

32

688

619

11

2.43

2.73

2.83

(19

1.46

7.68

(81

1.55

5.38

(71

(77

(66

2015 OUTLOOK

Newmont’s revised 2015 CAS and AISC outlook are down 2% and 4%, respectively, driven by a reduction in Asia Pacific and Africa region costs compared to previous guidance as well as lower than expected inventory costs at CC&V. Asia Pacific costs are lower than previous estimates primarily due to cost and efficiency improvements and some delayed spend, as well as lower oil prices and Australian dollar exchange rates. Africa cost outlook for 2015 is improved mostly due to better than expected power and diesel prices and Full Potential savings.

2015 gold production guidance is unchanged as better than expected production at Boddington and Akyem offset lower production at CC&V due to a slower mill ramp-up. This is not expected to impact long-term production. 2015 outlook for copper production remains unchanged.

The updated 2015 outlook includes reduced capital spending at all regions primarily due to cost savings and some delayed spend, partially offset by additional capital spend for the recently approved Tanami Expansion project.

Newmont will update long-term guidance in conjunction with the investor day to be held December 3, 2015.

Year-to-date, Newmont has paid $200 million toward its existing term loan and $130 million toward project debt in Ghana and Indonesia. Newmont will continue to analyze opportunities to pay our liabilities in advance, and could potentially repay up to a total of $750 million dollars by year end from cash flow and existing cash balances.

Projects Update

The Turf Vent Shaft

is expected to achieve commercial production in the fourth quarter of 2015, adding approximately 100,000 to 150,000 ounces of annual production to Carlin’s Leeville underground mine. The shaft provides ventilation required to increase production and decrease mine costs over the 11 year mine life at Leeville. Total development costs for the project are estimated at between $300 and $350 million with approximately $60 to $70 million spent in 2015.

(CC&V) acquisition closed on August 3, 2015 and successful integration is underway. CC&V is expected to lower Newmont’s overall cost profile with expected cost applicable to sales and all-in sustaining cost to be updated for purchase price allocation later this year. Gold production is expected to average between 350,000 and 400,000 ounces in 2016 and 2017. Total development capital costs to complete the expansion are approximately $200 million, with between $50 and $60 million to be spent in 2015.

is progressing on schedule and below budget. Merian will give Newmont a foothold in a prospective new district with significant upside potential. Gold production is expected to average between 400,000 and 500,000 ounces on a 100 percent basis during the first five years at a cost applicable to sales of $575 to $675 per ounce, and all-in sustaining cost of between $650 and $750 per ounce. Capital costs for the project are estimated at between $600 and $650 million for Newmont’s 75 percent share. Newmont’s capital expenditure is expected to be between $290 million and $330 million in 2015 and between $170 million and $210 million in 2016. The project is scheduled for start-up in the second half of 2016.

is expected to achieve commercial production in the first half of 2017. This first phase of development consists of an open pit mine and heap leach operation with production of between 100,000 and 150,000 ounces per year over an eight year mine life. Estimated average costs applicable to sales are expected to be between $400 and $500 per ounce and all-in sustaining costs of between $500 and $600 per ounce over the life of the mine, in the first quartile for gold production. Total capital costs for the project are estimated at between $250 and $300 million allocated roughly evenly in 2015 and 2016 with minimal spending in 2017.

includes constructing a second decline in the mine and building incremental capacity in the plant to increase profitable production and serve as a platform for exploration drilling to support future expansion. The expansion improves Tanami gold production to between 425,000 and 475,000 ounces per year at all-in sustaining costs of between $700 and $750 per ounce (for the first five years of the expansion) and increases mine life by three years. Capital costs for the project are estimated at between $100 and $120 million with about half of the capital spent in 2016 with the remaining allocated between 2015 and 2017. Additional production is expected to come on line in 2017.

The Ahafo Mill Expansion represents additional upside not currently included in 2015 outlook.

would increase profitable production by 100,000 to 125,000 ounces (first five year average) while lowering costs and off-setting the impacts of lower grades and harder ore. Capital costs are expected to be between $140 and $160 million. The Ahafo Mill Expansion is expected to be reviewed with Subika Underground in mid to late 2016. If approved in 2016, additional production would be expected in 2018.

Total Capital

2015 Outlook

Expenditures

(kozs, kt)

Carlin

850

910

$840

$900

$1,090

$1,170

$250

$270

Phoenix

200

220

$760

$820

$960

$20

$30

Twin Creeks

410

440

$530

$570

$700

$750

$50

$60

CC&V

80

100

$560

$600

$720

Long Canyon

$130

$150

Other North America

$10

$1,010

Yanacocha

880

940

450

490

$550

$590

$870

$930

$90

$110

Merian

$400

$420

$1,020

Boddington

730

780

$675

$725

$780

$830

$55

$65

Tanami

$800

$100

Waihi

107

$463

$544

$11

Kalgoorlie

310

340

$810

$1,000

Other Asia Pacific

$5

Batu Hijau

640

690

$410

$440

$580

$80

Ahafo

300

330

$610

$650

$910

$980

Akyem

480

$470

$630

$45

Equity Production

130

Corporate/Other

$40

$1,415

$1,625

Phoenix

25

$2.10

$2.30

$2.50

$2.70

35

$1.70

$1.90

210

230

120

$1.00

$1.20

$1.40

$1.60

Consolidated Expense Outlook

General & Administrative

170

190

Other Expense

125

150

Interest Expense

DD&A

1,160

1,240

Exploration and Projects

280

Sustaining Capital

740

Tax Rate

33%

37%

2015 Outlook projections used in this release (“Outlook”) are considered “forward-looking statements” and represent management’s good faith estimates or expectations of future production results as of the date hereof. Outlook is based upon certain assumptions, including, but not limited to, metal prices, oil prices, certain exchange rates and other assumptions. For example, 2015 Outlook...


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