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