<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 JUNE 30, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 1-1153
NEWMONT MINING CORPORATION
--------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-2526632
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(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
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(Registrant's telephone number, including area code)
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(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 156,512,263 shares of common stock outstanding on August 10, 1998.
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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
June 30,
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
Sales and other income
Sales $ 373,962 $ 421,760
Dividends, interest and other 2,329 5,659
----------- -----------
376,291 427,419
----------- -----------
Costs and expenses
Costs applicable to sales 207,635 211,741
Depreciation, depletion and amortization 72,243 66,140
Exploration and research 16,573 29,300
General and administrative 12,287 17,722
Interest, net of capitalized interest of $3,580
and $3,840, respectively 19,111 19,652
Merger and related asset write-offs -- 157,675
Other 2,634 6,202
----------- -----------
330,483 508,432
----------- -----------
Pre-tax income (loss) 45,808 (81,013)
Income tax (expense) benefit (7,057) 28,809
Minority interest in income of Minera Yanacocha (11,336) (16,775)
Minority interest in (income) loss of Newmont Gold Company (1,715) 4,335
----------- -----------
Net income (loss) $ 25,700 $ (64,644)
=========== ===========
Net income (loss) per common share,
basic and diluted $ 0.16 $ (0.41)
=========== ===========
Basic weighted average shares outstanding 156,511 156,119
=========== ===========
Cash dividends declared per Newmont Mining Corporation
common share $ 0.03 $ 0.12
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
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NEWMONT MINING CORPORATION AND SUBSIDIARIES
Statements of Consolidated Income
(In thousands, except per share)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
Sales and other income
Sales $ 752,029 $ 776,815
Dividends, interest and other 13,763 39,883
----------- -----------
765,792 816,698
----------- -----------
Costs and expenses
Costs applicable to sales 417,442 395,747
Depreciation, depletion and amortization 145,085 126,629
Exploration and research 32,685 52,872
General and administrative 26,759 34,357
Interest, net of capitalized interest of $6,455
and $5,980, respectively 39,603 38,941
Merger and related asset write-offs -- 157,675
Other 5,521 8,130
----------- -----------
667,095 814,351
----------- -----------
Pre-tax income 98,697 2,347
Income tax (expense) benefit (14,900) 15,388
Minority interest in income of Minera Yanacocha (23,569) (32,024)
Minority interest in (income) loss of Newmont Gold Company (3,764) 894
----------- -----------
Net income (loss) $ 56,464 $ (13,395)
=========== ===========
Net income (loss) per common share,
basic and diluted $ 0.36 $ (0.09)
=========== ===========
Basic weighted average shares outstanding 156,494 156,097
=========== ===========
Cash dividends declared per Newmont Mining Corporation
common share $ 0.06 $ 0.24
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
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NEWMONT MINING CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------ ------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 54,134 $ 146,232
Short-term investments 11,180 12,790
Accounts receivable 24,501 52,410
Inventories 386,235 339,549
Other current assets 126,817 90,389
------------ ------------
Current assets 602,867 641,370
Property, plant and mine development, net 2,554,409 2,598,809
Other long-term assets 356,844 373,803
------------ ------------
Total assets $ 3,514,120 $ 3,613,982
============ ============
Liabilities
Short-term debt $ -- $ 25,771
Current portion of long-term debt 56,132 43,301
Accounts payable 38,973 83,101
Other accrued liabilities 168,499 242,358
------------ ------------
Current liabilities 263,604 394,531
Long-term debt 1,174,861 1,179,410
Reclamation and remediation liabilities 91,909 88,651
Other long-term liabilities 183,703 192,033
------------ ------------
Total liabilities 1,714,077 1,854,625
------------ ------------
Minority interest in Minera Yanacocha 51,644 62,253
Minority interest in Newmont Gold Company 109,369 106,017
------------ ------------
Contingencies (Note 7)
Stockholders' equity
Common stock 250,414 250,350
Additional paid-in capital 818,081 817,040
Retained earnings 570,535 523,697
------------ ------------
Total stockholders' equity 1,639,030 1,591,087
------------ ------------
Total liabilities and stockholders' equity $ 3,514,120 $ 3,613,982
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
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NEWMONT MINING CORPORATION AND SUBSIDIARIES
Statements of Consolidated Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
Operating activities:
Net income (loss) $ 56,464 $ (13,395)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation, depletion and amortization 145,085 126,629
Amortization of capitalized mining costs 31,102 --
Undistributed earnings of affiliates 6,627 --
Merger related asset write-offs -- 24,749
Deferred taxes (14,799) (46,594)
Minority interest, net of dividends 9,704 (11,990)
Other 2,852 (259)
(Increase) decrease in operating assets:
Accounts receivable 18,393 (706)
Inventories (12,993) (102,787)
Other assets (13,039) (900)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses (64,964) 21,852
Other liabilities 6,134 16,150
----------- -----------
Net cash provided by operating activities 170,566 12,749
----------- -----------
Investing activities:
Additions to property, plant and mine development (115,198) (186,475)
Advances to joint venture and affiliates (54,275) (4,363)
Acquisition of additional interest in Minera Yanacocha (67,484) --
Cash effect of consolidating Minera Yanacocha -- 40,705
Other 1,428 (367)
----------- -----------
Net cash used in investing activities (235,529) (150,500)
----------- -----------
Financing activities:
Repayments of long-term borrowings (168,680) (627,697)
Proceeds from long-term borrowings 177,000 706,000
Net decrease in short-term borrowings (25,771) (23,249)
Dividends paid on common stock (9,389) (30,679)
Other (295) 483
----------- -----------
Net cash provided by (used in) financing activities (27,135) 24,858
----------- -----------
Net decrease in cash and cash equivalents (92,098) (112,893)
Cash and cash equivalents at beginning of period 146,232 227,053
----------- -----------
Cash and cash equivalents at end of period $ 54,134 $ 114,160
=========== ===========
Supplemental information:
Interest paid, net of amounts capitalized of
$6,455 and $5,980, respectively $ 40,483 $ 32,689
Income taxes paid $ 22,429 $ 21,528
</TABLE>
See Notes to Consolidated Financial Statements
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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 as long as the statements are not misleading.
In the opinion of management, all adjustments necessary for a fair
presentation of these interim statements have been included and are of a normal
recurring nature. These interim financial statements should be read in
conjunction with the financial statements of the Corporation included in its
1997 Annual Report on Form 10-K.
NMC owns approximately 93.75% of the common stock of Newmont Gold
Company ("NGC"). All of NMC's operations are held through NGC. On May 5, 1997,
NMC completed a merger with Santa Fe Pacific Gold Corporation ("Santa Fe") which
qualified as a tax-free reorganization and was accounted for as a pooling of
interests.
Certain prior year amounts have been reclassified to conform to the
current year presentation.
(2) Earnings Per Common Share
The following table presents a reconciliation of basic and diluted
earnings per share calculations (in thousands, except per share):
<TABLE>
<CAPTION>
For Three Months Ended June 30,
1998 1997
------------------------------------ -------------------------------------
Weighted Per Weighted Per
Income Average Share Income Average Share
(Loss) Shares Amount (Loss) Shares Amoun
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
BASIC EARNINGS PER SHARE
Net income (loss) applicable to
common shares $ 25,700 156,511 $ 0.16 $ (64,644) 156,119 $ (0.41)
EFFECT OF DILUTIVE SECURITIES
Equivalent common shares from stock
options -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
DILUTED EARNINGS PER SHARE
Net income (loss) applicable to
common shares $ 25,700 156,511 $ 0.16 $ (64,644) 156,119 $ (0.41)
========== ========== ========== ========== ========== ==========
</TABLE>
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<TABLE>
<CAPTION>
For Six Months Ended June 30,
1998 1997
------------------------------------ -------------------------------------
Weighted Per Weighted Per
Income Average Share Income Average Share
(Loss) Shares Amount (Loss) Shares Amount
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
BASIC EARNINGS PER SHARE
Net income (loss) applicable to
common shares $ 56,464 156,494 $ 0.36 $ (13,395) 156,097 $ (0.09)
EFFECT OF DILUTIVE SECURITIES
Equivalent common shares from stock
options -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
DILUTED EARNINGS PER SHARE
Net income (loss) applicable to
common shares $ 56,464 156,494 $ 0.36 $ (13,395) 156,097 $ (0.09)
========== ========== ========== ========== ========== ==========
</TABLE>
(3) Inventories
<TABLE>
<CAPTION>
At June 30, At December 31,
1998 1997
---------- ----------------
(In thousands)
<S> <C> <C>
Current:
Ore and in-process inventories $ 198,468 $ 172,589
Precious metals 99,620 82,594
Materials and supplies 86,953 82,819
Other 1,194 1,547
---------- ----------
$ 386,235 $ 339,549
========== ==========
Non-current:
Ore in stockpiles (included
in other long-term assets) $ 140,753 $ 174,445
========== ==========
</TABLE>
(4) Additional Interest in Minera Yanacocha
The Corporation has an interest in Minera Yanacocha, a gold mining
operation located in Peru, that began production in 1993. Prior to 1997, the
Corporation owned a 38.0% interest that was accounted for on an equity basis.
Beginning in 1997, Minera Yanacocha was consolidated into the Corporation's
financial statements following the acquisition of an additional 13.35% interest.
The acquisition was contested in litigation. In June 1998 the Peruvian Supreme
Court resolved the litigation in favor of the Corporation as described below.
In November 1993, the French government announced its intention to
privatize the mining assets of Bureau de Recherches Geologiques et Minieres, the
geological and mining bureau of the French government ("BRGM") and in September
1994, BRGM announced its intention to transfer its 24.7% interest in Minera
Yanacocha to a third party. NGC and Compania de Minas Buenaventura, S.A.
("Buenaventura"), then 38.0% and 32.3% owners of Minera Yanacocha, respectively,
filed suit in Peru to seek enforcement of their preemptive rights with respect
to the proposed BRGM transfer. In February 1995, after a preliminary favorable
appellate court ruling, both NGC and Buenaventura exercised their preemptive
rights. NGC deposited its share of the provisional $90 million purchase price
and the shares for its additional 13.35% interest with a Peruvian bank pending
final resolution of the case. NGC borrowed its purchase price amount from the
same Peruvian bank with the right of set off against the deposit, and
accordingly, these amounts have been netted in the accompanying December 31,
1997 balance sheet. In September 1996, a trial court ruling provided that the
preemptive rights were triggered in November 1993, and that the value of the
24.7% interest was $109.3 million. The value of NGC's shares held in escrow were
calculated as of such date at $59.1 million and the additional amount was
deposited with the Peruvian bank.
An appeal to the Superior Court of Lima was filed by BRGM and other
defendants challenging the court's determination that the preemptive rights were
triggered and the date and amount of the valuation. In February 1997, the
Superior Court upheld the decision of the trial court. Therefore, NGC reflected
the increase in its ownership from 38.0% to 51.35% as of February 1997.
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BRGM and other defendants filed a request for Peruvian Supreme Court
review of the Superior Court's resolution. In June of 1998, following several
hearings before the Peruvian Supreme Court, the Supreme Court issued a
resolution upholding the Superior Court judgment and finally resolving the
litigation in favor of NGC and Buenaventura. Following that resolution, the
Peruvian Bank released the shares held in escrow to NGC and Buenaventura and
deposited the $109.3 million purchase price in another Peruvian Bank for credit
to BRGM.
The effects of non-cash transactions are excluded from the statements
of consolidated cash flows. The following reflects the non-cash adjustments
recorded on January 1, 1997 for the Minera Yanacocha transaction described above
(in thousands):
<TABLE>
<S> <C>
Assets
Inventories $ 15,661
Other current assets 28,848
------------
Current assets 44,509
Property, plant and mine development, net 106,308
Other long-term assets 1,887
------------
Total assets $ 152,704
Liabilities
Current portion of long-term debt $ 14,256
Other current liabilities 31,190
------------
Current liabilities 45,446
Long-term debt 24,244
Other long-term liabilities 15,520
------------
Total liabilities $ 85,210
============
</TABLE>
In connection with the Minera Yanacocha acquisition described above,
the Corporation recorded $59.6 million in Property, plant and mine development,
representing the excess of the cost to purchase the additional interest over
the net book value of such interest.
(5) Comprehensive Income
The Corporation adopted Statement of Financial Accounting Standards
("SFAS") No. 130 "Reporting Comprehensive Income" in the first quarter of 1998.
Under SFAS No. 130, the Corporation reports comprehensive income, which in
addition to net income, includes all changes in equity during a period except
those resulting from investments by and distributions to owners. In the first
and second quarters of 1998 and 1997, there were no material differences between
net income and comprehensive income.
(6) Commodity Instruments
At June 30, 1998, the Corporation had forward sales contracts made on a
spot deferred basis ("spot deferred contracts") for approximately 122,000 ounces
of gold relating to domestic production during the period July 1998 through
September 1998 at a weighted average price of $425 per ounce. In July 1997, the
Corporation purchased approximately 1.1 million ounces of gold at an average
price of $331 per ounce, to offset all spot deferred contracts held at that
date. The gain or loss from these contracts is recognized in sales revenue as
the related gold is delivered.
The Corporation also entered into forward sales contracts, that began
maturing in January 1996 and continue through December 2000, for production from
its Minahasa property, located in Indonesia. These contracts consist of forward
sales of 125,000 ounces of gold per year at an average price of $454 an ounce,
plus 40% of the amount by which the market price exceeds the forward sales
price.
In 1997, the Corporation had purchased put options on 1.2 million
ounces at an exercise price of $375 per ounce and written call options on 0.4
million ounces at an exercise price of $464 per ounce. During the first quarter
of 1997, 300,000 ounces of put options were exercised with $6.7 million of cash
received and 100,000 ounces of call
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<PAGE> 9
options expired unexercised. The remaining option contracts were closed out in
March 1997 with $17.0 million of cash received. These amounts are reflected in
Dividends, interest and other income.
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133") which establishes accounting and
reporting standards for derivative instruments and for hedging activity. SFAS
No. 133 is effective for all periods in fiscal years beginning after June 15,
1999. SFAS No. 133 requires all derivatives to be recorded on the balance sheet
as either an asset or liability and measured at fair value. Changes in the
derivative's fair value will be recognized currently in earnings unless specific
hedge accounting criteria are met. The Corporation is currently assessing the
effect of SFAS No. 133 on its financial statements.
(7) Contingencies
Environmental Obligations
The Corporation's mining and exploration activities are subject to
various federal and state laws and regulations governing the protection of the
environment. These laws and regulations are continually changing and are
generally becoming more restrictive. The Corporation conducts its operations so
as to protect the public health and environment and believes its operations are
in compliance with all applicable laws and regulations. The Corporation has
made, and expects to make in the future, expenditures to comply with such laws
and regulations. The Corporation cannot predict such future expenditures.
Estimated future reclamation and remediation costs are based
principally on legal and regulatory requirements. At June 30, 1998 and December
31, 1997, $51.3 million and $45.6 million, respectively, were accrued for
reclamation and remediation costs relating to currently producing mineral
properties.
Certain appeals have been filed with the Department of Interior Board
of Land Appeals in conjunction with the Twin Creeks Environmental Impact
Statement and the Lone Tree Mine Plan of Operations. These appeals seek to
impose mitigation and other conditions on the mine operations. The Corporation
has intervened and does not believe that such appeals have merit. An unfavorable
outcome of such appeals, however, could result in additional conditions on
operations which may have a material adverse effect on the Corporation's
financial position or results of operations.
In addition, the Corporation is involved in several matters concerning
environmental obligations associated with former mining activities. Generally,
these matters concern developing and implementing remediation plans at the
various sites involved. The Corporation believes that the related environmental
obligations associated with these sites are similar in nature with respect to
the development of remediation plans, their risk profile and the compliance
required to meet general environmental standards. Based upon the Corporation's
best estimate of its liability for these matters, $49.7 million and $52.2
million were accrued for such obligations at June 30, 1998 and December 31,
1997, respectively. These amounts are included in Other accrued liabilities and
Reclamation and remediation 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 70% greater or 15% lower
than the amount accrued at June 30, 1998. The amounts accrued for these matters
are reviewed periodically based upon facts and circumstances available at the
time. Changes in estimates are charged to Other expense in the period estimates
are revised.
Details about certain of the more significant sites involved are
discussed below.
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
addition, Idarado agreed in the consent decree to undertake specified
remediation work at its former mining site in the Telluride/Ouray area of
Colorado. Remediation work at this property was substantially complete by the
end of 1997. If the remediation does not achieve specific performance objectives
defined in the consent decree, the State may require Idarado to implement
supplemental activities at the site, also as defined in the consent decree.
Idarado and the Corporation have obtained a $9.6 million letter of credit to
secure their potential obligations under the consent decree.
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<PAGE> 10
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 mid-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 environmental monitoring and operating and 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
EPA has not yet selected the final remedy for the site. 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.
Dawn Mining Company ("Dawn") -- 51% owned by NGC
Dawn leased a currently inactive open-pit uranium mine on the Spokane
Indian Reservation in the State of Washington. The mine is subject to regulation
by agencies of the U.S. Department of Interior, the Bureau of Indian Affairs and
the Bureau of Land Management, as well as the EPA. Dawn also owns a nearby
uranium millsite facility.
In 1991, Dawn's lease was terminated. As a result, Dawn was required to
file a formal mine closure and reclamation plan. The Department of Interior has
commenced an Environmental Impact Study to analyze Dawn's proposed plan and to
consider alternate closure and 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 Department of Interior previously notified Dawn that when the lease
was terminated, it would seek to hold Dawn and the Corporation (as Dawn's then
51% owner) liable for any costs incurred as a result of Dawn's failure to comply
with the lease and applicable regulations. Other government agencies also might
attempt to hold the Corporation liable for future reclamation or remediation
work at the mine or millsite. 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
generate funds to close and reclaim both the mine and the mill. The license is
being challenged by third parties.
(8) Supplementary Data
The ratio of earnings to combined fixed charges and preferred stock
dividends for the six months ended June 30, 1998 was 2.9. The Corporation
guarantees certain third party debt which had total interest obligations of $0.6
million for the six months ended June 30, 1998. The Corporation has not been
required to pay any interest on these obligations in the past, nor does the
Corporation 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 combined fixed charges and preferred stock dividends.
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<PAGE> 11
(9) Other
American Institute of Certified Public Accountants Statement of
Positions 98-5 ("SOP 98-5") provides guidance on the financial reporting of
start-up and organization costs. SOP 98-5 broadly defines start-up activities
and requires the costs of such start-up activities and organization costs to be
expensed as incurred. SOP 98-5 is effective for fiscal years beginning after
December 15, 1998 and the initial application is reported as the cumulative
effect of a change in accounting principle. The Corporation has not yet
completed its evaluation of the impact of SOP 98-5.
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
The following provides information which management believes is
relevant to an assessment and understanding of Newmont Mining Corporation
("NMC") and its subsidiaries' (collectively, "Newmont") consolidated results of
operations and financial condition. The discussion should be read in conjunction
with the Management's Discussion and Analysis included in Newmont's 1997 Annual
Report on Form 10-K. NMC's principal subsidiary is Newmont Gold Company ("NGC"),
which holds all operating assets of Newmont, and is approximately 93.75% owned
by NMC.
SUMMARY
Newmont earned $25.7 million ($0.16 per share) and $56.5 million ($0.36
per share) in the quarter and six months ended June 30, 1998 compared with
losses of $64.6 million ($0.41 per share) and $13.4 million ($0.09 per share) in
the respective 1997 periods. The six months ended June 30, 1997 included an
after-tax charge of $109.2 million related to expenses and write-offs associated
with the Santa Fe merger and an after-tax gain of $14.3 million related to the
close-out of certain put and call option contracts. Excluding these one-time
items, Newmont earned $44.6 million ($0.29 per share) and $81.5 million ($0.52
per share) in the 1997 quarter and six months.
Total equity gold production for the quarter and six months ended June
30, 1998 was 1,037,700 ounces and 2,070,500 ounces, respectively, slightly
higher than second quarter 1997 production and up 10% from 1,875,800 ounces in
the respective 1997 six month period. Total cash costs per ounce declined 6% for
both the quarter ($182 vs. $193) and six months ($183 vs. $195) ended June 30,
1998 compared to the corresponding 1997 periods. With the market decline in gold
prices, realized prices per equity ounce were $48 and $47 lower in the three and
six months ended June 30, 1998 compared with those of the same 1997 periods. A
portion of production was sold under commodity instruments resulting in realized
prices that were $21 and $25 higher than the average market price during the
quarter and six months ended June 30, 1998, respectively and $26 higher than in
the 1997 periods.
MARKET CONDITIONS AND RISKS
GOLD PRICE
Newmont's profitability is significantly affected by changes in the
market price of gold. Gold prices can fluctuate widely and are affected by
numerous factors, such as demand, forward selling by producers, central bank
sales and purchases, investor sentiment and production levels. During 1998 the
market gold price declined to its lowest level in 18 years. Continued
uncertainty about the level of central banks' holding and lending of gold
reserves, the perception of sustainable low-inflationary environments and other
factors could continue to adversely impact the market price of gold. Although
Newmont is one of the lowest cost gold producers, a sustained period of low gold
prices could have a material adverse affect on its financial position and
results of operations. At current estimates of 1998 production and expenses, a
$10 change in the gold price results in an annual increase or decrease of
approximately $38 million in cash flow from operations and approximately $27
million ($0.17 per share) in net income.
Newmont has utilized commodity instruments to protect the selling price
of certain anticipated gold production. Approximately 20% of production in 1998
is being sold under such instruments. Newmont is also taking further steps to
optimize operations to preserve cash without impairing long-term growth during
the current low gold price environment. Cash outlays are being reduced through a
combination of lower capital spending, a refocused exploration program, revised
mine and production plans and decreased general and administrative expenses.
FOREIGN CURRENCY
In addition to the U.S., Newmont has operations in Peru, Uzbekistan and
Indonesia. Gold produced at these operations is sold in the international
markets for U.S. dollars. The cost and debt structures at these operations are
also primarily U.S. dollar denominated. To the extent that there are
fluctuations in local currency exchange rates against the
12
<PAGE> 13
U.S. dollar, the devaluation of a local currency is generally economically
neutral or beneficial to the operation since local salaries and supply contracts
will decrease against the U.S. dollar revenue stream.
Over the past year, Indonesia has experienced a significant devaluation
of its currency, the rupiah. Newmont's functional currency for its Indonesian
projects is the U.S. dollar; however, certain receivables, primarily related to
Value Added Tax, are denominated in rupiah. During the three months and six
months ended June 30, 1998, $1.6 million and $2.9 million, respectively, were
charged to Other expense to reflect the recent devaluation of these receivables.
RESULTS OF OPERATIONS
PRODUCTION
Newmont increased production in the first six months of 1998 compared
with the corresponding 1997 period by expanding its processing capabilities for
refractory ores in Nevada and Minahasa and by increasing mining rates at Minera
Yanacocha. Equity production levels and per ounce cash costs are summarized
below:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Equity production ozs. (000):
Nevada operations 734.8 723.0 1,462.8 1,312.5
Mesquite 38.4 66.0 80.4 122.6
Minera Yanacocha 147.8 132.0 302.3 239.4
Zarafshan-Newmont 42.8 58.8 92.7 113.5
Minahasa 73.9 48.8 132.3 87.8
---------- ---------- ---------- ----------
Total 1,037.7 1,028.6 2,070.5 1,875.8
========== ========== ========== ==========
Total cash costs per equity ounce:
Nevada operations $199 $209 $202 $210
Mesquite $192 $228 $195 $228
Minera Yanacocha $109 $ 91 $106 $ 96
Zarafshan-Newmont $258 $204 $216 $211
Minahasa $108 $171 $119 $175
Weighted average $182 $193 $183 $195
</TABLE>
Total cash costs include charges for mining ore and waste associated
with current period gold production, processing ore through milling and leaching
facilities, production taxes, royalties and other cash costs. On a per ounce
basis, weighted average costs in the 1998 quarter and six months were lower than
those in the respective 1997 periods as a result of increased production levels,
processing higher-grade ore with increased recovery rates in Nevada, increased
tonnage under leach at Minera Yanacocha and continued cost containment efforts.
U.S. OPERATIONS
Newmont's Nevada operations are along the Carlin Trend near Elko and in
the Winnemucca Region, where the Twin Creeks and the Lone Tree Complex mines are
located.
Production in the first six months of 1998 increased 11% from the
corresponding 1997 period primarily due to (i) a full six months of production
in 1998 from the Twin Creeks autoclaves which began production in the second
half of 1997, the Lone Tree flotation plant, which began operations in March
1997 and the 50%-owned Rosebud mine, which commenced operation in February 1997;
(ii) processing of higher-grade oxide ore primarily from the Tusc deposit; and
(iii) transportation of selected ore types to processing facilities that
maximized gold recovery and production in 1998; (iv) somewhat offset by lower
leach ounce production because of diminishing oxide leach ore availability as
the mines transition from oxide to refractory ores. Total cash costs per ounce
declined 5% and 4% in the quarter and six months ended June 30, 1998, with
higher production, fewer royalty burdened ounces and cost containment efforts.
Nevada production in 1998 is expected to be comparable to the 2.8 million ounces
in 1997 with somewhat higher total cash costs per ounce from the $205 in 1997
reflecting the processing of lower-grade ore during the second half of 1998.
13
<PAGE> 14
Production at the Mesquite mine, a heap-leach operation in southern
California, decreased 42% and 34% in the 1998 quarter and six months from the
same periods in 1997. Mesquite is reaching the end of its economic life;
however, a prospective property received in connection with a recent land
exchange may lead to the addition of new gold reserves and an extension of the
mine life. Mining rates have been reduced to allow production to continue while
Newmont performs development work on the newly acquired land. Exploration
drilling on the new property began in July 1998. Total cash costs per ounce
declined 16% and 14% in the 1998 second quarter and six months from the same
periods in 1997 as operational efficiencies increased and the workforce was
reduced by 40% in January 1998. Production is expected to decrease to about
150,000 ounces in 1998, but with somewhat lower total cash costs per ounce than
those in 1997.
INTERNATIONAL OPERATIONS
Production at Minera Yanacocha in Peru increased 12% to 287,900 ounces
(147,800 equity ounces) in the second quarter of 1998 compared with 257,000
ounces (132,000 equity ounces) in the same period of 1997. Production in the six
months ended June 30, 1998 increased 21% to 588,600 ounces (302,300 equity
ounces) compared with 485,200 ounces (239,400 equity ounces) in the same period
of 1997. Operation of a fourth mine and start-up of a second Merrill-Crowe plant
and third leach pad in late 1997 contributed to the additional operational
capacity in 1998. Cash costs at $109 per ounce and $106 per ounce in the 1998
quarter and six months increased 20% and 10% compared to the respective 1997
periods. During the first part of 1998, heavy rainfall from the effects of El
Nino damaged access roads and power lines resulting in disruption of fuel supply
and delays in obtaining some materials at Minera Yanacocha. An estimated $2.6
million was spent in the first six months of 1998 to maintain operations and to
assist with road repairs. In addition, Minera Yanacocha's cash cost per ounce
increased due to longer haulage distances, slightly lower ore grades and higher
strip ratios. Estimated gold production for 1998 is expected to approximate
1,300,000 ounces (667,600 equity ounces) with cash costs increasing slightly
from the 1997 level.
As discussed in Note 4 of Item 1, an additional 13.35% interest in
Minera Yanacocha was treated as acquired in 1997, increasing Newmont's ownership
to 51.35%. This followed a decision of the Peruvian Superior Court that Newmont
had a preemptive right to acquire its proportionate share of a former partner's
interest. As a result, Minera Yanacocha was consolidated into Newmont's
financial statements beginning in 1997, with the increase in ownership reflected
as of February 1997. Previously, Minera Yanacocha was accounted for as an equity
interest in an affiliated company. The acquisition of this additional interest
was contested in the Peruvian Supreme Court and resolved in Newmont's favor in
June 1998.
The Zarafshan-Newmont Joint Venture, in the Central Asian Republic of
Uzbekistan, is a 50/50 joint venture between a subsidiary of Newmont and two
Uzbekistan governmental entities. Production decreased 27% and 18% in the 1998
quarter and six months compared with the same periods in 1997 primarily as a
result of lower recoveries on the leach pad. Total cash costs per ounce
increased 26% in the second quarter of 1998 compared with the same period in
1997 because of a $2.9 million charge reflecting a lower expected leach recovery
rate. During the first six months of 1998 increased operational efficiencies and
cost reduction efforts almost entirely offset the second quarter adjustment.
Production in 1998 is expected to decrease slightly from 1997, while cash costs
per ounce are expected to be slightly higher than 1997.
In Indonesia, at Newmont's 80%-owned Minahasa property, production
increased 51% in the quarter and six months ended June 30, 1998 compared with
the same periods in 1997 with higher ore grades and increased roaster
efficiency. Total cash costs per ounce declined by 37% and 32% in the same
periods with improved productivity in 1998 and lower costs through cost
containment efforts and the benefit from the devaluation of the rupiah.
Production in 1998 is expected to be 260,000 ounces, slightly higher than 1997.
14
<PAGE> 15
FINANCIAL RESULTS
The decrease in consolidated sales revenue in the quarter and six
months ended June 30, 1998 compared with the 1997 period resulted from a
decrease in the average gold price received partially offset by increased
production levels as shown in the following table:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Consolidated sales (in millions) $ 374.0 $ 421.8 $ 752.0 $ 776.8
Consolidated production ozs. (000) 1,177.8 1,153.7 2,356.8 2,121.6
Average price realized per consolidated ounce $ 318 $ 366 $ 319 $ 366
Average spot price received per ounce $ 299 $ 342 $ 297 $ 343
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 vs. 1997 1998 vs. 1997
------------------ ----------------
<S> <C> <C>
Change in sales revenues due to (in millions):
Consolidated production $ 8.8 $ 86.1
Average gold price received (56.6) (110.9)
------- --------
Total $ (47.8) $ (24.8)
======= ========
</TABLE>
Costs applicable to sales include total cash costs and provisions for
estimated final reclamation expenses related to consolidated production. The
decrease in costs applicable to sales in the three months ended June 30, 1998
resulted from processing higher grade ore and cost containment efforts. The
increase in costs applicable to sales in the six months ended was primarily
associated with increased production levels at Nevada and Minera Yanacocha.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Costs applicable to sales (in millions)
Nevada operations $ 148.1 $ 152.8 $ 298.4 $ 278.7
Mesquite 7.6 15.3 16.1 28.3
Minera Yanacocha 32.8 23.1 66.7 49.0
Zarafshan-Newmont 11.0 12.1 20.1 24.1
Minahasa 8.1 8.4 16.1 15.6
---------- ---------- ---------- ----------
Total $ 207.6 $ 211.7 $ 417.4 $ 395.7
========== ========== ========== ==========
</TABLE>
Depreciation, depletion and amortization increased 9% in the quarter
and 15% in the six months ended June 30, 1998 from the respective 1997 periods,
as a result of the completion of the Winnemucca Region mine and mill expansion
projects in 1997, assets placed in service at the foreign operations and higher
production at Nevada, Minera Yanacocha and Minahasa.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
1998 1997 1998 1997
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Depreciation, depletion and amortization
(in millions):
Nevada operations $ 45.2 $ 40.8 $ 88.9 $ 78.0
Mesquite 4.9 6.3 9.7 12.7
Minera Yanacocha 13.4 10.5 28.1 19.8
Zarafshan-Newmont 3.1 3.0 6.2 5.9
Minahasa 5.0 3.7 9.8 7.2
Other 0.6 1.8 2.4 3.0
---------- ---------- ---------- ----------
Total $ 72.2 $ 66.1 $ 145.1 $ 126.6
========== ========== ========== ==========
</TABLE>
Exploration and research expenses decreased by $12.7 million and $20.2
million and general and administrative costs decreased by $5.4 million and $7.6
million in the quarter and six months ended June 30, 1998 compared with the same
periods in 1997 as a result of synergies from the merger and cash conservation
efforts.
Interest expense, net of capitalized interest remained flat for the
1998 periods compared with the respective 1997 periods and is expected to remain
at this level.
15
<PAGE> 16
Dividends, interest and other income for the six months ended June 30,
1998 includes $8.3 million for business interruption insurance for problems
associated with the roaster in Nevada. The six months ended June 30, 1997
included gains of $23.7 million related to the close-out of certain Santa Fe put
and call option contracts and $5.1 million related to the disposition of a Santa
Fe uranium property.
In the three and six months ended June 30, 1998, Newmont recorded an
income tax provision of $7.1 million and $14.9 million compared with benefits of
$28.8 million and $15.4 million in the 1997 periods, which primarily resulted
from costs and related write-offs associated with the Santa Fe merger.
Minority interest in income of Minera Yanacocha decreased by $5.4
million and $8.5 million in the quarter and six months ended June 30, 1998,
respectively, compared with the 1997 periods. Lower gold prices in 1998 and
higher depreciation resulting from additional assets placed in service in 1997
contributed to lower net income for Minera Yanacocha between the two periods.
Additionally, Minera Yanacocha was not consolidated at 51.35% until February
1997.
LIQUIDITY AND CAPITAL RESOURCES
During the first six months of 1998 cash flow from operations ($170.6
million) and a drawdown of existing cash balances ($92.1 million) funded capital
expenditures ($115.2 million), net advances to joint ventures and affiliates
($54.3 million), acquisition of additional interest in Minera Yanacocha ($67.5
million) and dividends ($9.4 million). In addition, during the first six months
of 1998 Newmont repaid $17.5 million of its debt borrowings. Newmont expects to
continue to use existing cash balances and operating cash flows to fund 1998
capital expenditures and dividends.
INVESTING ACTIVITIES AND CAPITAL EXPENDITURES
Capital expenditures for the six months ended June 30, 1998 and 1997
were as follows:
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------
1998 1997
---------- ----------
<S> <C> <C>
Capital expenditures (in millions):
U.S. operations $ 59.7 $ 117.6
International operations 45.4 61.8
Other projects and capitalized interest 10.1 7.1
---------- ----------
Total $ 115.2 $ 186.5
========== ==========
</TABLE>
Expenditures in the U.S. during the first six months of 1998 primarily
related to activities in Nevada, including leach pad expansion ($18.9 million),
capitalized mining costs ($19.0 million) and other ongoing capital requirements.
International capital expenditures included costs for leach pad expansion at
Minera Yanacocha ($18.0 million). Capital expenditures for 1997 included costs
related to the Twin Creeks autoclaves, Lone Tree flotation plant and other
processing equipment in Nevada and a new leach facility at Minera Yanacocha.
Payment for the acquisition of an additional interest in Minera
Yanacocha in June 1998 included the purchase price of $59.1 million and costs
required to complete the acquisition.
Newmont has a 45% interest in the Batu Hijau project in Indonesia,
which is accounted for on an equity basis. At June 30, 1998 and December 31,
1997, Newmont's investment of $126.6 million and $76.8 million, respectively,
was included in Other long-term assets. Included in Advances to joint ventures
and affiliates was $55.6 million of funding for the project which was 45%
complete at June 30, 1998. Offsetting these advances were reimbursements of
$16.2 million included in the change in accounts receivable. Newmont's remaining
commitment for project funding is approximately $250 million, of which about $90
million is expected to occur throughout the remainder of 1998. Total funding in
1998 is higher than previously anticipated to facilitate expenditure timing and
greater levels of cash availability within the joint venture.
Batu Hijau contains proven and probable reserves of 10.6 billion pounds
of copper (4.8 billion equity pounds) and 12.1 million ounces of gold (5.4
million equity ounces). Production is expected to begin in late 1999, with a
projected mine life in excess of 20 years. The cost for development of the
open-pit mine, mill and infrastructure including employee housing, a port,
electrical generation facilities, interest during construction, cost escalation
and working capital is expected to approximate $1.9 billion.
16
<PAGE> 17
Financing agreements for $1.0 billion were signed in July 1997 for
development of the project. The financing is guaranteed by Newmont and its
partner, Sumitomo Corporation ("Sumitomo"), 56.25% and 46.75%, respectively,
until project completion tests are met, and will be non-recourse thereafter
(except for a $125 million contingent support facility that Newmont and Sumitomo
have agreed to provide). Repayment of the borrowings will begin the earlier of
six months after project completion or June 15, 2001. Draws of $520 million from
the facility occurred in the first six months of 1998 and are expected to total
approximately $720 million by year end.
FINANCING ACTIVITIES
During the first six months of 1998, Newmont repaid $25.8 million under
a short term debt facility, $9.6 million of project financing at
Zarafshan-Newmont, and $9.1 million of project financing at Minera Yanacocha.
Net borrowings under Newmont's $1.0 billion revolving credit facility totaled
$27.0 million for the first six months of 1998.
In July 1998, Newmont filed a "shelf" registration statement with the
Securities and Exchange Commission which amended an existing shelf registration,
and increased to $400 million Newmont's capacity to issue equity securities.
Newmont has no plans to issue any equity securities under these filings at this
time.
OTHER
Cash used for accounts payable and accrued expenses of $65.0 million
for the first six months of 1998 primarily related to the payment of interest,
severance and other benefit-related accruals.
YEAR 2000
Newmont has undertaken a comprehensive "Year 2000 Compliance Program"
("Program") to address its requirements regarding year 2000 issues, which
generally refers to the inability of hardware, software and control systems to
correctly identify two-digit references to specific years, beginning with the
year 2000. The Program, conducted by a cross-functional employee group and
outside consultants, consists of four work streams at each geographic location,
including automated processes, process control systems (including embedded
technology such as microprocessors), personal computers and third-party material
suppliers and contractors. Within each work stream there are five phases
consisting of: assessment; analysis; remediation (including development of
contingency plans); testing; and certification. A third party audit of the
Program will be scheduled during the second half of 1998 and year 2000
compliance is scheduled to be completed for all material systems by mid-1999.
Currently, each location is working on the assessment and analysis
phases of each work stream and some have commenced the remediation phase. On a
global basis, the assessment phase and analysis phase for all work streams is
scheduled for completion in the beginning of the fourth quarter of 1998, at
which time an estimate of required remediation work and associated
implementation costs will be determined. Based on work performed to date, no
material issues or costs have been identified; however, subsequent work may lead
to discovery of material issues or costs. Newmont believes that its Program will
adequately address year 2000 issues and prevent significant business
disruptions. However, compliance-related failures, including those of material
third-party suppliers (such as suppliers of power, oxygen, chemicals and
refining), could result in temporary delays in Newmont's ability to generate
cash from the sale of gold. Newmont's management believes that if such delays
were to occur, they should not have a material adverse effect on its financial
position or results of operations.
SAFE HARBOR STATEMENT
The foregoing discussion and analysis, as well as certain information
contained elsewhere in this Quarterly Report, contain "forward-looking
statements" within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended. These statements concerning future operations or events are
subject to important risks, uncertainties and other factors that could cause
actual results to differ materially. Forward-looking statements involve certain
factors that are subject to change, including, but not limited to: the price of
gold; interest and currency exchange rates; geological and metallurgical
assumptions; operating performance of equipment, processes and facilities; labor
relations; timing of receipt of necessary governmental permits or approvals;
weather and other acts of God; domestic and foreign laws or regulations,
particularly relating to the environment and mining; domestic and international
economic and political conditions; the ability of joint venture partners to meet
their obligations; the ability of Newmont to obtain or maintain necessary
financing; and other risks and hazards associated with mining operations.
17
<PAGE> 18
More detailed information regarding Newmont, its operations and factors
that could materially affect its financial position and results of operations
are included in Newmont's Annual Report on Form 10-K as well as other filings
with the Securities and Exchange Commission. Many of these factors are beyond
Newmont's ability to control or predict. Readers are cautioned not to put undue
reliance on forward-looking statements. Newmont disclaims any intent or
obligation to update publicly any forward-looking statements set forth herein,
whether as a result of new information, future events or otherwise.
<PAGE> 19
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Registrant's annual meeting of stockholders was held on May 7, 1998.
All eleven directors nominated to serve as directors of Registrant were
elected. The vote was as follows:
<TABLE>
<CAPTION>
Broker
Nominee For Withheld Abstentions Non-Votes
- ------- --- -------- ----------- ---------
<S> <C> <C> <C> <C>
R. C. Cambre 133,842,028 1,000,213 0 0
J. T. Curry, Jr. 133,842,079 1,000,162 0 0
J. P. Flannery 133,803,298 1,038,943 0 0
L. I. Higdon, Jr. 132,792,463 2,049,778 0 0
T. A. Holmes 133,796,053 1,046,188 0 0
G. B. Munroe 133,794,662 1,047,579 0 0
R. A. Plumbridge 133,298,958 1,543,283 0 0
M. A. Qureshi 132,781,549 2,060,692 0 0
M. K. Reilly 133,849,528 992,713 0 0
J. H. Sisco 133,767,443 1,074,798 0 0
W.I.M. Turner, Jr. 133,842,712 999,529 0 0
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
12 - Statement re Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.
27 - Financial Data Schedule.
(b) Reports filed on Form 8-K during the quarter ended June 30, 1998:
No reports were filed on Form 8-K during the quarter ended June 30,
1998.
19
<PAGE> 20
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: August 11, 1998 /s/ WAYNE W. MURDY
----------------------------
Wayne W. Murdy
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: August 11, 1998 /s/ LINDA K. WHEELER
----------------------------
Linda K. Wheeler
Controller
(Principal Accounting Officer)
20
<PAGE> 21
EXHIBIT INDEX
-------------
<TABLE>
<S> <C>
Exhibit 12 - Statement re Computation of Ratio of Earnings To Combined
Fixed Charges and Preferred Stock Dividends
Exhibit 27 - Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 12
NEWMONT MINING CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(Amounts in thousands except ratio)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1998
-----------------
<S> <C>
Earnings:
Income before income taxes $ 71,364
Adjustments:
Net interest expense (1) 39,603
Amortization of capitalized interest 1,329
Portion of rental expense representative of interest 2,399
Minority interest 27,333
--------
$142,028
========
Fixed Charges and Preferred Stock Dividends(2):
Net interest expense (1) $ 39,603
Capitalized interest 6,455
Portion of rental expense representative of interest 2,399
--------
$ 48,457
========
Ratio of earnings to fixed charges 2.93
========
</TABLE>
(1) Includes interest expense of majority-owned subsidiaries and amortization of
debt issuance costs.
(2) There were no preferred stock dividends in the six months ended June 30,
1998.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 54,134
<SECURITIES> 11,180
<RECEIVABLES> 24,501
<ALLOWANCES> 0
<INVENTORY> 386,235
<CURRENT-ASSETS> 602,867
<PP&E> 4,024,322
<DEPRECIATION> 1,469,913
<TOTAL-ASSETS> 3,514,120
<CURRENT-LIABILITIES> 263,604
<BONDS> 1,174,861
0
0
<COMMON> 250,414
<OTHER-SE> 1,388,616
<TOTAL-LIABILITY-AND-EQUITY> 3,514,120
<SALES> 752,029
<TOTAL-REVENUES> 765,792
<CGS> 417,442
<TOTAL-COSTS> 562,527
<OTHER-EXPENSES> 64,965
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 39,603
<INCOME-PRETAX> 98,697
<INCOME-TAX> 14,900
<INCOME-CONTINUING> 56,464
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 56,464
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0.06
</TABLE>
