<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------------- ------------
Commission File Number: 1-1153
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NEWMONT MINING CORPORATION
- - ----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-1806811
- - ------------------------------ ----------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
incorporation or organization)
1700 Lincoln Street, Denver, Colorado 80203
- - ------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
303-863-7414
---------------------------------------------------
(Registrant's telephone number, including area code)
- - ------------------------------------------------------------------------
Former name, address and fiscal year, if changed since last report)
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. [X] Yes [ ] No
There were 99,397,435 shares of common stock outstanding on April 26,
1996.
Exhibit index is on page 17.
There are 21 pages included in this report.
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
NEWMONT MINING CORPORATION AND SUBSIDIARIES
Statements of Consolidated Income
(In thousands, except per share)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1996 1995
--------- ---------
<S> <C> <C>
Sales and other income
Sales $ 154,705 $ 134,459
Dividends, interest and other 7,021 17,282
--------- ---------
161,726 151,741
--------- ---------
Costs and expenses
Costs applicable to sales 98,098 83,184
Depreciation, depletion and amortization 28,487 24,720
Exploration and research 10,351 8,452
General and administrative 11,831 11,902
Interest, net of capitalized interest
of $2,125 in 1996 and $2,810 in 1995 9,957 8,716
Other 3,729 2,041
--------- ---------
162,453 139,015
--------- ---------
Equity in income of affiliated companies 11,532 6,145
--------- ---------
Pre-tax income 10,805 18,871
Income tax benefit (provision) 983 (1,873)
Minority interest in income of Newmont Gold
Company (1,117) (1,405)
--------- ---------
Net income 10,671 15,593
Preferred stock dividends - (3,953)
--------- ---------
Net income applicable to common shares $ 10,671 $ 11,640
========= =========
Net income per common share $ 0.11 $ 0.14
========= =========
Weighted average number of shares of common
stock and common stock equivalents outstanding 98,466 86,149
Cash dividends declared per common share $ 0.12 $ 0.12
</TABLE>
<PAGE> 3
NEWMONT MINING CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 241,563 $ 59,142
Short-term investments 12,020 11,820
Accounts receivable 27,343 24,458
Inventories 193,586 173,984
Other current assets 29,297 20,128
---------- ----------
Current assets 503,809 289,532
Property, plant and mine development, net 1,294,266 1,255,278
Other long-term assets 233,064 228,960
---------- ----------
Total assets $2,031,139 $1,773,770
========== ==========
Liabilities
Short-term debt $ 33,774 $ 29,179
Current portion of long-term debt 14,000 4,375
Accounts payable 38,117 38,570
Other accrued liabilities 112,177 122,312
---------- ----------
Current liabilities 198,068 194,436
Long-term debt 594,634 604,259
Reclamation and remediation liabilities 65,219 64,795
Other long-term liabilities 86,473 85,352
---------- ----------
Total liabilities 944,394 948,842
---------- ----------
Minority interest in Newmont Gold Company 102,968 81,981
---------- ----------
Contingencies
Stockholders' Equity
Common stock 159,007 150,738
Capital in excess of par value 562,886 308,566
Retained earnings 261,884 283,643
---------- ----------
Total stockholders' equity 983,777 742,947
---------- ----------
Total liabilities and
stockholders' equity $2,031,139 $1,773,770
========== ==========
</TABLE>
<PAGE> 4
NEWMONT MINING CORPORATION AND SUBSIDIARIES
Statements of Consolidated Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1996 1995
--------- ---------
<S> <C> <C>
Operating activities
Net income $ 10,671 $ 15,593
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 28,487 24,720
Minority interest, net of dividends (131) 158
Distributions in excess of (less than)
earnings of affiliates (140) 2,276
Deferred taxes (22) (1,151)
--------- ---------
38,865 41,596
(Increase) decrease in operating assets:
Accounts receivable (2,561) 13,510
Inventories (18,380) (6,698)
Other assets (12,207) 6,015
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses (4,691) 6,634
Other liabilities 1,544 (7,503)
Other operating 96 991
--------- ---------
Net cash provided by operating activities 2,666 54,545
--------- ---------
Investing activities
Additions to property, plant and mine
development (73,215) (70,673)
Investment in joint venture (2,735) (11,941)
Other 1,531 (7,842)
--------- ---------
Net cash used in investing activities (74,419) (90,456)
--------- ---------
Financing activities
Proceeds from short-term borrowings 4,595 -
Proceeds from issuance of common stock 261,492 149
Dividends paid on common stock (11,913) (10,329)
Dividends paid on preferred stock - (3,953)
Debt issuance costs - (75)
--------- ---------
Net cash provided by (used in) financing
activities 254,174 (14,208)
--------- ---------
Net increase (decrease) in cash and cash
equivalents 182,421 (50,119)
Cash and cash equivalents at beginning of period 59,142 160,637
--------- ---------
Cash and cash equivalents at end of period $ 241,563 $ 110,518
========= =========
</TABLE>
<PAGE> 5
NEWMONT MINING CORPORATION AND SUBSIDIARIES
Statements of Consolidated Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1996 1995
--------- --------
<S> <C> <C>
Supplemental information:
Interest paid, net of amounts capitalized of
$2,125 in 1996 and $2,810 in 1995 $ 13,767 $ 414
Income taxes (paid) refunded $ (2,000) $ 4,000
</TABLE>
<PAGE> 6
NEWMONT MINING CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(1) Basis of Preparation of Financial Statements
These unaudited interim consolidated financial statements of Newmont
Mining Corporation ("NMC") and its subsidiaries (collectively, the
"Corporation") have been prepared in accordance with the rules and regulations
of the Securities and Exchange Commission. Such rules and regulations allow
the omission of certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles, so long as the statements are not misleading.
In the opinion of management, these financial statements reflect all
adjustments which are necessary for a fair statement of the results for the
periods presented. All adjustments were of a normal recurring nature. These
interim financial statements should be read in conjunction with the annual
financial statements of the Corporation included in its 1995 Annual Report on
Form 10-K.
All of the Corporation's operations are held through Newmont Gold Company
("NGC"), which is approximately 91% owned by NMC.
Certain prior year amounts have been reclassified to conform with
the current year presentation.
(2) Inventories
<TABLE>
<CAPTION>
At March 31, At December 31,
1996 1995
------------- --------------
(In thousands)
<S> <C> <C>
Current:
Ore and in-process inventories $112,210 $101,684
Precious metals 35,458 29,691
Materials and supplies 43,990 40,651
Other 1,928 1,958
-------- --------
$193,586 $173,984
======== ========
Non-current:
Ore in stockpiles (included
in other long-term assets) $ 55,098 $ 53,167
======== ========
</TABLE>
<PAGE> 7
(3) Investment in Minera Yanacocha
Included in other long-term assets is NGC's 38% equity investment in
Minera Yanacocha, S.A. ("Minera Yanacocha"), a Peruvian entity. Summarized
financial information of Minera Yanacocha is as follows:
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1996 1995
--------- --------
(In thousands)
<S> <C> <C>
Sales $ 71,600 $ 46,200
Costs applicable to sales and
depreciation, depletion &
amortization $ 27,700 $ 18,600
Exploration $ 1,800 $ 2,300
Other, including Peruvian income
tax provision $ 13,400 $ 8,200
Net income $ 28,700 $ 17,100
</TABLE>
<TABLE>
<CAPTION>
At March 31, At December 31,
1996 1995
----------- --------------
(In thousands)
<S> <C> <C>
Current assets $ 73,700 $ 71,700
Non-current assets 85,500 88,100
-------- --------
Total assets $159,200 $159,800
======== ========
Current liabilities $ 56,400 $ 50,000
Non-current liabilities 42,600 48,300
-------- --------
Total liabilities $ 99,000 $ 98,300
======== ========
</TABLE>
In September 1994, an affiliate of Bureau de Recherches Geologiques et
Minieres, the geological and mining bureau of the French government ("BRGM"),
announced its intention to transfer its 24.7% interest in Minera Yanacocha to
another entity. NGC and Compania de Minas Buenaventura, S.A. ("Buenaventura"),
38.0% and 32.3% owners of Minera Yanacocha, respectively, filed suit in Peru
to seek enforcement of a provision in the bylaws of Minera Yanacocha, giving
shareholders preemptive rights on the sale or transfer of any shareholder's
interest. In February 1995, an appellate court in Peru issued a preliminary
ruling in favor of NGC and Buenaventura, both of whom elected to exercise their
preemptive rights to acquire their proportionate share of the 24.7% interest.
<PAGE> 8
In accordance with the court ruling, Minera Yanacocha canceled the BRGM shares
and issued shares representing interests in Minera Yanacocha of 13.35% to NGC
and 11.35% to Buenaventura. NGC deposited $48.6 million, together with the
additional shares, with a Peruvian bank pending the final resolution of the
case. NGC borrowed the $48.6 million from the same Peruvian bank with the
right of setoff against the deposit, and accordingly, these amounts have been
netted. The trial is presently scheduled to take place in May 1996. Part of
the final resolution of the case, if resolved in NGC's favor, will determine
how much NGC must pay for the interest, which may be more or less than the
amount deposited. NGC intends to fund the purchase of the additional interest
with its available cash or borrowings under credit facilities. As a result of
the preliminary ruling of the court and NGC's exercise of its preemptive right,
NGC currently owns 51.35% of Minera Yanacocha. This additional interest of
13.35% will not be reflected in the Corporation's financial statements until
a final determination is made by the Peruvian courts.
(4) Stockholders' Equity
In January 1996, NMC issued 4.65 million shares of common stock for $51.87
per share under an existing shelf registration statement filed with the
Securities and Exchange Commission. Proceeds of the issue netted $241.3
million which were used to purchase an equal number of shares of common stock
of NGC directly from NGC.
(5) Contingencies
Environmental Obligations
Estimated future reclamation and mine closure costs are based principally
on legal and regulatory requirements. Such costs are accrued and charged over
the expected operating lives of the Corporation's mines using a unit-of-
production method. At March 31, 1996 and December 31, 1995, $19.2 million and
$19.0 million, respectively, were accrued for reclamation costs relating to
currently producing mineral properties.
In addition, the Corporation is involved in several matters concerning
environmental obligations associated with former mining activities. Based upon
the Corporation's best estimate of its liability for these matters, $56.0
million and $55.8 million were accrued for such liabilities at March 31, 1996
and December 31, 1995, respectively. These amounts are included in other
current liabilities and reclamation liabilities. 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 100% greater
or 5% lower than the amount accrued at March 31, 1996.
A discussion of the environmental obligations associated with former
mining activities as of March 31, 1996 follows.
Idarado Mining Company ("Idarado") - 80.1% owned by NGC
In July 1992, the Corporation and Idarado signed a consent decree with the
State of Colorado ("State") which was agreed to by the U.S. District Court of
Colorado to settle a lawsuit brought by the State under the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), generally
referred to as the "Superfund Act." Idarado settled natural resources damages
and past and future response costs and provided habitat enhancement work. In
<PAGE> 9
addition, Idarado agreed in the consent decree to undertake specified
remediation work related to its former mining activities in the Telluride/Ouray
area of Colorado. Approximately 80% of the work has been completed. The
Corporation's best estimate of the remaining cost of this work is included in
the accrued liability for environmental matters, as previously discussed. If
the remediation work does not meet certain measurement criteria specified in
the consent decree, the State and court reserve the right to require Idarado
to perform other remediation work. Idarado and the Corporation have obtained
a $16.3 million letter of credit to secure their obligations under the consent
decree.
Resurrection Mining Company ("Resurrection") - 100% owned by NGC
In 1983, the State of Colorado filed a lawsuit under the Superfund Act
which involves a Resurrection Mining Company and ASARCO Incorporated ("ASARCO")
joint venture mining operation near Leadville, Colorado. This action was
subsequently consolidated with a lawsuit filed by the U.S. Environmental
Protection Agency ("EPA") in 1986, with the EPA taking the lead role. The
proceedings seek to compel the defendants to remediate the impacts of pre-
existing, historic mining activities that date back to the late 1800's which
the government agencies claim are causing substantial environmental problems
in the area. The lawsuits have named the Corporation, Resurrection, the joint
venture and ASARCO as defendants in the proceedings. The EPA is also
proceeding against other companies with interests in the area.
The EPA divided the remedial work into two phases. Phase I addresses the
Yak Tunnel, a drainage and access tunnel owned by the joint venture. Phase II
addresses the remainder of the site.
In 1988 and 1989, the EPA issued administrative orders with respect to
Phase I work for the Yak Tunnel. The joint venture, ASARCO, Resurrection and
the Corporation have collectively implemented those orders by constructing a
water treatment plant which was placed in operation in early 1992. The joint
venture is in negotiations regarding remaining remedial work for Phase I, which
primarily consists of monitoring and environmental maintenance activities.
The parties have entered into a consent decree with respect to Phase II
which apportions liabilities and responsibilities for the site among the
various parties. The EPA has approved remedial actions for selected components
of Resurrection's portion of the site, which were initiated in 1995. However,
the determination of the final remedy for the site has not been completed by
the EPA. Accordingly, the Corporation cannot yet determine the full extent or
cost of its share of the remedial action which will be required under Phase II.
The government agencies may also seek to recover for damages to natural
resources.
Although the actual amount of Resurrection's and the Corporation's share
of such costs for Phase I and Phase II cannot be presently determined, the
Corporation's best estimate of its potential exposure for these costs is
included in the accrued liability for environmental matters, as previously
discussed.
Dawn Mining Company ("Dawn") - 51% owned by NGC
Dawn leased a currently inactive open-pit uranium mine on the Spokane
Indian Reservation in the State of Washington. The mine is subject to
regulation by agencies of the U.S. Department of Interior, the Bureau of Indian
Affairs and the Bureau of Land Management, as well as the EPA. Dawn also owns
a nearby uranium millsite facility.
<PAGE> 10
In 1991, Dawn's lease was terminated. As a result, Dawn was required to
file a formal mine reclamation plan. The Department of Interior has commenced
an Environmental Impact Study to analyze Dawn's proposed plan and to consider
alternate reclamation plans for the mine. Dawn cannot predict at this time
what type of mine reclamation plan may be selected by the Department of
Interior. Dawn does not have sufficient funds to pay for the reclamation plan
it proposed, for any alternate plan, or for the closure of its mill. The
Corporation's best estimate for the future costs related to these matters is
included in the accrued liability for environmental matters, as 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. If asserted, the Corporation will
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.
Dawn has received a license for a mill closure plan which could
potentially generate the necessary funds to reclaim the mine and the mill. The
license, however, is currently being challenged by third parties.
State of Nevada Sales Tax Claim
During 1995, an agency of the State of Nevada Department of Taxation filed
an assessment claiming sales tax due relating to the sale-leaseback of the
Corporation's Carlin refractory ore treatment plant. This assessment,
including interest, totaled approximately $30.0 million. The Corporation filed
a Petition for Redetermination and a hearing was held by the agency that issued
the assessment in October 1995. The hearing officer reaffirmed the agency's
determination. The Corporation appealed this determination to the State Tax
Commission and the Commission ruled in the Corporation's favor on May 2, 1996.
Batu Hijau Contract of Work
In March 1996, the Indonesian government granted an extension of the
feasibility study period under the Batu Hijau Contract of Work, which is
between the Republic of Indonesia and an 80% subsidiary of NGC, to June 1, 1996
(See Note 14 to the Corporation's December 31, 1995 financial statements). In
addition, the Indonesian government stated that construction activities are to
commence by August 2, 1996.
(6) Supplementary Data
The ratio of earnings to fixed charges for the quarter ended March 31,
1996 was 1.73. The Corporation guarantees certain third party debt which had
total interest obligations of $0.6 million for the quarter ended March 31,
1996. The Corporation has not been required to pay any interest on these
obligations in the past, nor does it expect to have to pay any amounts with
respect to such debt in the future. Therefore, such amounts have not been
included in the ratio of earnings to fixed charges.
<PAGE> 11
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
The following discussion summarizes the results of operations of Newmont
Mining Corporation ("NMC") and its subsidiaries (collectively, the
"Corporation") for the quarters ended March 31, 1996 and 1995 and changes in
its financial condition from December 31, 1995. NMC's principal subsidiary is
Newmont Gold Company ("NGC"), which is approximately 91% owned by NMC, and
which holds all of the operating assets of the Corporation. This discussion
should be read in conjunction with the Management's Discussion and Analysis
included in the Corporation's 1995 Annual Report on Form 10-K.
RESULTS OF OPERATIONS
The Corporation earned $10.7 million, or $0.11 per share, in the first
quarter of 1996 compared with $15.6 million, or $0.14 per share, in the first
quarter of 1995. This decrease was primarily attributable to $11.8 million of
business interruption insurance proceeds recognized in the 1995 quarter
compared with only $3.1 million recognized in the 1996 quarter, as discussed
below. NGC's total equity production rose to 452,700 ounces in the first
quarter of 1996 from 401,200 ounces in the first quarter of 1995 at a weighted
average cash cost of production per ounce for the same periods of $230 and
$219, respectively.
During the first quarter of 1996, consolidated gold sales (excluding NGC's
equity interest in Minera Yanacocha's production) were 385,000 ounces at an
average price of $402 per ounce compared to 354,900 ounces at an average price
of $379 per ounce in the first quarter of 1995. The 30,100 ounce increase in
production contributed $11.4 million to the increase in sales revenue, while
the $23 increase in the average per ounce gold price resulted in $8.8 million
of the increase. The higher production in the 1996 quarter was primarily due
to NGC's share of production at Zarafshan-Newmont of 25,700 ounces. Zarafshan-
Newmont commenced operations in the latter half of 1995. The Corporation
expects Zarafshan-Newmont to produce in excess of 300,000 ounces in 1996, with
50% attributable to NGC's interest. The Carlin operation also showed a slight
increase in production in the 1996 quarter to 359,300 ounces from 354,900 in
the year ago quarter primarily due to the mining of high grade underground ore
and increased throughput at the refractory ore treatment plant partially offset
by lower production at the lower grade oxide mining and milling operations.
Although the refractory ore treatment plant's performance improved
significantly from a year ago, certain operating issues prevented this facility
from performing at optimal levels in the 1996 quarter. The Corporation expects
to achieve steadily increasing performance rates at this facility over the
remainder of the year. The Corporation expects Carlin production in 1996 to
approximate 1995's production of 1.6 million ounces. In addition, the Minahasa
project in Indonesia will commence commercial operations in mid-1996 and is
expected to contribute approximately 90,000 ounces in 1996.
During the first quarter of 1996, NGC's equity income from its 38%
interest in Minera Yanacocha increased to $10.9 million from $7.1 million in
the 1995 first quarter. Minera Yanacocha produced 178,200 ounces, or 67,700
ounces attributable to NGC's interest, in the 1996 first quarter at total cash
costs of $114 per ounce. This compares to 121,900 ounces, or 46,300 ounces
attributable to NGC's interest, in the 1995 first quarter at total cash costs
of $123 per ounce. The increase in production is primarily due to a third mine
coming into production in early 1996, and the processing of higher grade ore
in the 1996 quarter. Production in 1996 is expected to approximate 700,000
ounces, or 266,000 ounces attributable to NGC's share.
<PAGE> 12
Costs applicable to sales increased $14.9 million in the first quarter of
1996 compared to the same period in 1995. Of this amount $5.8 million relates
to NGC's share of costs attributable to Zarafshan-Newmont. On a per ounce of
gold sold basis, costs applicable to sales were higher in the first quarter of
1996 compared to the first quarter of 1995. The following table summarizes the
significant components of these costs per ounce of gold sold (in the 1995 first
quarter there was only Carlin production):
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------------------
1996
----------------------------------
Zarafshan-
Carlin Newmont Consolidated 1995
------ ---------- ------------ ------
<S> <C> <C> <C> <C>
Cash operating costs $225 $223 $225 $192
Royalties 28 - 26 36
Other cash costs 2 - 2 5
---- ---- ---- ----
Total cash costs 255 223 253 233
Other 2 1 2 1
---- ---- ---- ----
Total costs applicable
to sales $257 $224 $255 $234
==== ==== ==== ====
</TABLE>
The increase in cash operating costs at Carlin on a per ounce of gold sold
basis in the 1996 quarter was the result of higher mining costs associated with
underground mining and higher milling costs associated with the refractory ore
treatment plant, which did not operate at optimal capacity due to repairs and
maintenance. Per ounce costs are expected to decline over the balance of the
year due to higher throughput at the refractory ore treatment plant, increased
mining of higher grade underground ore and a gradual increase in Zarafshan-
Newmont's lower-cost production.
Royalty costs per ounce decreased due to lower production of royalty-
burdened ore in 1996 compared to 1995 at the Carlin operations. For the year,
royalty costs per ounce are expected to remain below 1995 amounts.
In addition to expensed production costs, during the 1996 first quarter
the Corporation capitalized $21.7 million of mining costs associated with
deposits having diverse grade and waste-to-ore ratios, the largest being the
Post deposit on the Carlin Trend. This compares to $8.4 million in the 1995
first quarter. The increase is attributable to more tons mined at deposits
with these characteristics in the 1996 quarter compared to the 1995 quarter.
Depreciation, depletion and amortization increased $3.8 million in the
1996 quarter compared to the 1995 quarter primarily due to depreciation related
to the facilities at Zarafshan-Newmont which were not in service during the
first quarter of 1995.
<PAGE> 13
First quarter 1996 exploration expense increased $1.9 million compared to
the 1995 quarter primarily due to increased exploration in Southeast Asia and
pre-feasibility activity on a joint venture property in Carlin in which NGC has
a 60% interest.
The difference in general and administrative expenses between the 1996 and
1995 first quarters is not significant.
Net interest expense increased $1.2 million in the 1996 quarter compared
with the 1995 quarter. Interest expense increased from $11.5 million in the
1995 quarter to $12.1 million in the 1996 quarter primarily due to increased
debt levels at the Zarafshan-Newmont operations and additional short-term
borrowings. In addition, capitalized interest decreased from $2.8 million in
the 1995 quarter to $2.1 million in the 1996 quarter due to the start-up of the
Zarafshan-Newmont operations, upon which interest was capitalized in the 1995
quarter, which was partially offset by an increase in capitalized interest
related to development of the Minahasa project in Indonesia.
Dividends, interest and other income includes $3.1 million and $11.8
million for business interruption insurance recorded in the 1996 and 1995
quarters, respectively, for the start-up problems with the Carlin refractory
ore treatment plant, as previously discussed. The business interruption claim
was settled in the first quarter of 1996 and no further income related to this
claim is expected to be recognized. The 1995 quarter also includes $2.9
million of dividends from NGC's former investment in Southern Peru Copper
Corporation.
Both years' effective tax rates are very sensitive to the estimated amount
of annual percentage depletion since it is such a high proportion of estimated
pre-tax financial income for each year. Other differences between the 9%
benefit in the 1996 quarter and 10% provision in the 1995 quarter are not
considered significant.
LIQUIDITY AND CAPITAL RESOURCES
A portion of the $241.3 million of proceeds received from the issuance of
common stock, as discussed in Note 4, were used to fund $73.2 million of
capital expenditures. Of this amount, approximately $47.6 million was spent
on projects at the Carlin operations including capitalized mining costs,
underground development and improvements to the refractory ore treatment plant.
In addition, $14.9 million and $7.2 million was spent in Indonesia for mine
site development on the Minahasa project and development plans on the Batu
Hijau project, respectively.
Cash flow provided by operating activities in the first quarter of 1996
was impacted by the usage of cash to increase inventory levels at the
Zarafshan-Newmont and Carlin operations and to prepay certain taxes.
Cash requirements during 1996 are expected to exceed operating cash flow.
The proceeds received from the issuance of common stock during January 1996 are
more than sufficient to fund NGC's 1996 activities.
In March 1996 the Corporation and Sumitomo Corporation of Tokyo
("Sumitomo") signed an agreement in principle to jointly develop and operate
the Batu Hijau project, a large copper/gold deposit in Indonesia. Under the
terms of the agreement, the Corporation will retain a 45% interest in the
project and Sumitomo will have a 35% interest. The remaining 20% is held by
an Indonesian company. The arrangement is subject to completion of a
definitive joint venture agreement and approval by both companies' boards of
<PAGE> 14
directors and appropriate consultation with the Indonesian government. Capital
costs are expected to be approximately $1.5 billion. Through March 31, 1996,
the Corporation had invested approximately $68.7 million in exploring and
developing Batu Hijau. Upon execution of the joint venture agreement, Sumitomo
will make an initial investment in the project equal to its pro rata share of
the Corporation's investment in Batu Hijau through closing. Sumitomo will make
an additional payment to the project of approximately $100 million which will
be applied toward the Corporation's share of future development and
construction costs as well as Sumitomo's pro rata equity share. Sumitomo will
also provide or arrange for 60% of the project's financing requirements up to
$800 million.
<PAGE> 15
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
11 - Statement re Computation of Per Share Earnings.
12 - Statement re Computation of Ratio of Earnings to Fixed Charges.
27 - Financial Data Schedule.
(b) Reports on Form 8-K:
No reports were filed on Form 8-K during the quarter ended March 31, 1996.
<PAGE> 16
SIGNATURES
Pursuant to the requirements 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
(Registrant)
Date: May 3, 1996 /s/ WAYNE W. MURDY
--------------------------------
Wayne W. Murdy
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: May 3, 1996 /s/ GARY E. FARMAR
--------------------------------
Gary E. Farmar
Vice President and Controller
(Principal Accounting Officer)
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Exhibit 11 - Statement re Computation of Per Share Earnings. 18-19
Exhibit 12 - Statement re Computation of Ratio of Earnings 20
to Fixed Charges.
Exhibit 27 - Financial Data Schedule. 21
</TABLE>
<PAGE> 18
EXHIBIT 11
Page 1 of 2
NEWMONT MINING CORPORATION AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(In thousands, except per share)
PRIMARY EARNINGS PER SHARE CALCULATIONS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1996 1995
--------- --------
<S> <C> <C>
INCOME DATA:
Net income $ 10,671 $ 15,593
Preferred stock dividends - 3,953
--------- --------
Net income applicable to common shares $ 10,671 $ 11,640
========= ========
COMMON AND COMMON EQUIVALENT SHARES:
Weighted average common shares 98,036 86,082
Equivalent common shares from
stock options 430 67
--------- --------
Common and common equivalent shares 98,466 86,149
========= ========
EARNINGS PER COMMON SHARE:
Net income per common and common
equivalent shares $ 0.11 $ 0.14
========= ========
</TABLE>
<PAGE> 19
EXHIBIT 11
Page 2 of 2
NEWMONT MINING CORPORATION AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(In thousands, except per share)
FULLY DILUTED EARNINGS PER SHARE CALCULATIONS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1996 1995
--------- --------
<S> <C> <C>
INCOME DATA:
Net income applicable to common shares $ 10,671 $ 15,593
======== ========
COMMON AND COMMON EQUIVALENT SHARES:
Weighted average common shares 98,036 86,082
Equivalent common shares from
stock options 469 249
Equivalent common shares from
conversion of preferred stock - 7,899
-------- --------
Common and common equivalent shares 98,505 94,230
EARNINGS PER COMMON SHARE:
Net income per common and common
equivalent shares $ 0.11 $ 0.17
======== ========
</TABLE>
<PAGE>
<PAGE> 20
EXHIBIT 12
NEWMONT MINING CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Amounts in thousands except ratios)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1996
------------------
<S> <C>
Earnings:
Income before income taxes $ 9,688
Adjustments:
Net interest expense (1) 9,957
Amortization of capitalized interest 597
Portion of rental expense representative
of interest 478
Minority interest of majority-owned
subsidiaries that have fixed charges 1,117
Undistributed income of less than 50%
owned entities (140)
--------
$ 21,697
========
Fixed Charges:
Net interest expense (1) $ 9,957
Capitalized interest 2,125
Portion of rental expense representative
of interest 478
--------
$ 12,560
========
Ratio of earnings to fixed charges 1.73
========
</TABLE>
(1) Includes interest expense of majority-owned subsidiaries and
amortization of debt issuance costs.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
ART. 5 FOR 1ST QUARTER 10Q
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1996
<CASH> 241,563
<SECURITIES> 12,020
<RECEIVABLES> 27,343
<ALLOWANCES> 0
<INVENTORY> 193,586
<CURRENT-ASSETS> 503,809
<PP&E> 2,016,552
<DEPRECIATION> 722,286
<TOTAL-ASSETS> 2,031,139
<CURRENT-LIABILITIES> 198,068
<BONDS> 594,634
<COMMON> 721,893
0
0
<OTHER-SE> 261,884
<TOTAL-LIABILITY-AND-EQUITY> 2,031,139
<SALES> 154,705
<TOTAL-REVENUES> 161,726
<CGS> 98,098
<TOTAL-COSTS> 126,585
<OTHER-EXPENSES> 25,911
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,957
<INCOME-PRETAX> 10,805
<INCOME-TAX> 983
<INCOME-CONTINUING> 10,671
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,671
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
</TABLE>
