<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
February 4, 1999
Newmont Mining Corporation
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-1153 13-1806811
- ---------------------------- ------------------------ -----------------------
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification Number)
1700 Lincoln Street, Denver, Colorado 80203
- --------------------------------------------------------------------------------
(Address of principal executive offices) (zip code)
(303) 863-7414
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. OTHER EVENTS.
On February 4, 1999, Newmont reported fourth-quarter and full-year earnings
for 1998. Gold production increased to 4.07 million ounces during 1998, a 3
percent increase from 3.96 million ounces in 1997. Net income was $5.8 million,
or $0.03 per share, for the fourth quarter and $69.2 million, or $0.44 per
share, for the year, before an accounting change and impairment charge.
Operating cash flow increased to $373.5 million, or $2.35 per share, in 1998
from $283.8 million, or $1.82 per share, in 1997. Year-end gold reserves
remained unchanged from 1997 at 52.6 million ounces.
A write-down of assets that are impaired at low gold prices and adoption of
a new accounting standard (AICPA Statement of Position 98-5) requiring the
expensing of facility start-up costs resulted in non-cash charges of $427.2
million, or $2.56 per share, after taxes in the fourth quarter and $462.6
million, or $2.91 per share, for 1998. As a result of such charges, Newmont
reported a net loss of $421.4 million, or $2.53 per share, for the fourth
quarter of 1998 and $393.4 million, or $2.47 per share, for 1998. As a result
of the accounting change, Newmont's results for the first three quarters were
restated, and a charge of $32.9 million, or $.21 per share, was taken
retroactively in the first quarter of 1998.
The full text of the press release announcing Newmont's financial results
is set forth in Exhibit 99.1 attached hereto and is incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) None.
(b) None.
(c) Exhibits
99.1 Press release, dated February 4, 1999, announcing
fourth-quarter and full-year earnings for 1998
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
By: /s/ Timothy J. Schmitt
-----------------------------------
Name: Timothy J. Schmitt
Title: Vice President, Secretary
and Assistant General Counsel
Dated: February 5, 1999
<PAGE>
EXHIBIT INDEX
Exhibit Number Description of Exhibits
99.1 Press release, dated February 4, 1999, announcing fourth-
quarter and full-year earnings for 1998
<PAGE>
Exhibit 99.1
FOR IMMEDIATE RELEASE
NEWMONT
NEWS RELEASE
NEWMONT MINING CORPORATION, 1700 LINCOLN STREET, DENVER, COLORADO 80203
Media Contact: Doug Hock
303-837-5812
RECORD PRODUCTION, LOWER COSTS & STRONG CASH FLOW IN 1998
DENVER, February 4, 1999 - Newmont Mining Corporation achieved record gold
production of 4.07 million ounces during 1998 while reducing total cash costs to
$183 per ounce, the lowest in more than a decade. Despite the lowest gold price
in 20 years, the company earned $5.8 million, or 3 cents per share, in the
fourth quarter and $69.2 million, or 44 cents per share, for the year, before an
accounting change and impairment charge.
At the same time, the company announced the following accomplishments and
strategic decisions to respond to the prolonged slump in the gold price:
. A 31 percent increase in operating cash flow in 1998 to $373.5 million,
or $2.35 per share, from $283.8 million, or $1.82 per share, in 1997. In
addition to lower operating costs, exploration and general and
administrative expenses were reduced 28 percent and cash flow benefited
from better asset utilization.
. Year-end gold reserves of 52.6 million ounces, essentially unchanged
from 1997, with an increase in non-reserve mineralized material and a
significant reduction in sensitivity to low gold prices.
. An agreement in principle with Barrick Gold for an asset swap in Nevada
that will, among other things, accelerate access to the high-grade Deep
Post deposit, and
. A write-down of assets that are impaired at low gold prices and adoption
of a new accounting standard requiring the expensing of facility start-
up costs. These non-cash charges totaled $427.2 million, or $2.56 per
share, after tax in the fourth quarter and $462.6 million, or $2.91 per
share, for all of 1998.
As a result, Newmont had a net loss of $421.4 million, or $2.53 per share,
in the fourth quarter of 1998 and $393.4 million, or $2.47 per share, for the
full year. In the 1997 quarter, Newmont earned $38.6 million, or 25 cents per
share, after a charge of $3.0 million, or 2 cents per share, related to the
acquisition of Santa Fe Pacific Gold Corporation. For the full year, 1997
earnings were $68.4 million, or 44 cents per share, after charges of $97.9
million, or 63 cents per share, related to the Santa Fe acquisition.
(MORE)
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2
"We continue to believe that the gold market has fallen below its economic
equilibrium and that Newmont offers shareholders the best opportunity to benefit
from rising gold prices," said Ronald C. Cambre, Newmont's Chairman, President
and CEO. "Equally important, we've taken disciplined and creative measures to
insure that we have the operating flexibility and financial strength to remain
an industry leader regardless of the gold price."
Operating and Financial Performance
- -----------------------------------
In 1998, Newmont achieved the highest production level ever reported by a
North American gold company, a 3 percent increase from the 3.96 million ounces
it produced in 1997. Total cash costs were reduced $4 per ounce from $187 in
1997. However, this was not enough to offset a $44 decline in the company's
average realized gold price to $310 per ounce. Sales and other income declined
to $1.47 billion from $1.63 billion in 1997.
North American operations produced 2.94 million ounces of gold in 1998,
compared with 3.0 million ounces in 1997. Total cash costs of $207 per ounce
were unchanged from the prior year as cost reductions offset the adverse impact
in Nevada of treating increased volumes of refractory ore.
International operations produced nearly 2 million ounces of gold, with
Newmont's equity share rising 19 percent to 1.1 million equity ounces from
952,000 ounces in 1997. Production from Minera Yanacocha in Peru increased 27
percent to 1.34 million ounces (Newmont's share: 686,000) with full production
from a fourth mine and second processing plant. Higher grades helped Minahasa in
Indonesia increase output 26 percent to 261,000 ounces. Production at Zarafshan
in Uzbekistan declined 13 percent to 374,600 ounces (Newmont's share: 187,000)
due to lower leach recovery rates. Total cash costs for international
operations declined 5 percent to $121 per equity ounce.
During the year, Newmont invested $420.8 million in capital projects and
affiliated companies, compared with $425.1 million in 1997. Capital
expenditures for property, plant and mine development were reduced nearly 50
percent in 1998 to $216 million, but increased funding was required for
Newmont's share of the Batu Hijau project and for the purchase of an additional
13 percent interest in Yanacocha following a favorable decision by the Peruvian
Supreme Court in early 1998.
The company ended the year with $79.1 million in cash compared with $146.2
million at year-end 1997, while total debt of $1.25 billion was essentially
unchanged from December 31,1997.
(MORE)
<PAGE>
3
For the 1998 fourth quarter, sales of $351.9 million compared with $412.2
million a year earlier as the average realized gold price dropped to $300 per
ounce from $330 in the 1997 quarter.
Gold production during the quarter totaled 996,000 equity ounces, 11
percent below the year-ago quarter. North American output declined 22 percent to
673,000 ounces as production in Nevada was reduced at higher-cost pits in
keeping with the company's emphasis on cash flow. International production
increased 23 percent to 323,000 equity ounces with increases at all locations.
Total cash costs were reduced to $181 per equity ounce from $185.
During the quarter, Newmont Mining acquired the 6 percent of Newmont Gold
Company that it did not already own. The acquisition increased the number of
common shares outstanding to 167.2 million at year-end and to a weighted average
of 159.0 million shares for the year.
Accounting Change and Impairment Write-down
- -------------------------------------------
The company adopted, effective January 1, 1998, a more conservative method
of reporting start-up costs, AICPA Statement of Position 98-5. The change
required that $5.0 million, or 3 cents per share, in after-tax start-up costs,
primarily at Batu Hijau, be expensed during the year. Results for the first
three quarters of the year were restated for such costs and $2.5 million, or 1
cents per share, was recorded in the fourth quarter. In addition, a charge of
$32.9 million ($52.8 million pretax), or 21 cents per share, was taken
retroactively in the first quarter of 1998 for the cumulative effect of
reversing costs that had been capitalized in prior years.
An impairment charge of $424.7 million ($614.9 million pre tax), reduced
fourth quarter earnings by $2.55 per share and full-year results by $2.67 per
share. During the year, the company initiated a comprehensive review of its
life-of-mine plan and processing options in Nevada in order to optimize
operations and enhance cash flow in a low gold price environment. Mining rates
were reduced at high-cost pits and greater use of stockpiles was initiated. The
company's U.S. workforce was reduced by almost 1,100 people, including 940 in
Nevada.
As part of that process, a systematic analysis of the company's long-lived
assets was undertaken during the fourth quarter to determine whether their book
values could be recovered from projected future cash flows. The analysis
determined that some domestic assets were impaired, including those acquired by
Santa Fe in a 1993 asset exchange that was accounted for as a purchase at their
then-fair market value.
Almost 95 percent of the write-down was in Nevada, including $160 million
in stockpiles and capitalized mining costs, $127 million in deferred mine
development and mineral rights, and $300 million in facilities, equipment and
supplies. Included in the latter are a partial write-down of the Sage and Pinon
mills at Twin Creeks, Lone Tree processing facilities, and oxide Mill No. 4 at
Carlin. The remaining 5 percent covered a portion of the Mesquite mine in
California plus various exploration properties and other assets.
(MORE)
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4
Reserves
- --------
Year-end gold reserves totaled 52.6 million equity ounces, essentially
unchanged from 1997 as the company replaced ounces depleted by mining during the
year. Exploration success at Yanacocha accounted for most of the reserve
additions. Non-reserve mineralized resources increased to 21.6 million equity
ounces from 18.9 million at year-end 1997.
Reserves for both years were calculated at a long-term gold price of $350
an ounce. The sensitivity of reserves to a lower gold price was significantly
reduced from 1997. At $325 gold, reserves would decline 6 percent to 49.5
million ounces, while at $300, reserves would be reduced 16 percent to 44.2
million ounces.
"Reserve quality is as important as reserve quantity," Mr. Cambre said in
reporting that Newmont had reduced its cost structure and rigorously reviewed
its mining and metallurgical assumptions at every operation over the past year
in order to reduce its sensitivity to lower prices. "Every ounce in our reserve
base is backed by a mine plan showing that it can be economically produced in a
timely fashion." This was done on a pit-by-pit, layback-by-layback basis.
Furthermore, while Newmont's long-term price assumption of $350 an ounce is
justified by both history and reasonable projections, a more conservative hurdle
of profitability was imposed on reserves expected to be mined over the next
three years.
The largest reduction in sensitivity occurred in Nevada where
geotechnical and engineering remodeling of the Gold Quarry and Twin Creeks pits,
coupled with an overall optimization of mining costs in the area, greatly
increased the amount of ore that can be economically mined at a $300 price. The
same analysis also resulted in the addition of 3 million ounces of non-reserve
mineralized resources at Gold Quarry.
Nevada Asset Swap
- -----------------
Separately today, Newmont and Barrick Gold Corporation announced an
agreement in principle for a strategic swap of assets on the Carlin Trend in
Nevada that will enhance the operating flexibility and earnings potential for
both companies. Each company will exchange 2 million ounces of reserves and
various land rights needed to optimize the area's potential. Specifically, the
transaction will:
. Accelerate mining from the high-grade Deep Post deposit by allowing
access through a decline at the bottom of the Betze-Post pit. Mine
development will begin this year with production scheduled for 2001,
two-and-a-half years earlier than previously planned. Capital cost of
the decline will be $30 million less than sinking a shaft. Newmont also
receives Barrick's 450,000 ounce-share (at a grade of 0.55 ounce per
ton) of the deposit in addition to its own share of 1.9 million ounces
with a grade of 0.80 opt.
. Facilitate development on a 100 percent basis of the Leeville, Four
Corners and Turf deposits, currently scheduled for mining in 2005.
Under the agreement, Barrick will cede its 40 percent interest in the
High Desert property containing reserves of 1.2 million ounces of gold
(0.42 opt).
(MORE)
<PAGE>
. Provide immediate access to 3.8 million tons of stockpiled low-
carbonate ore (0.09 opt) containing 350,000 ounces of gold for
processing by bio-milling at Newmont's Carlin Mill No. 5.
. Open exploration potential in the highly-promising corridor between
Deep Post and Deep Star.
Mr. Cambre said Newmont estimates that the asset exchange will increase
its Nevada production by 940,000 ounces over the next decade, while increasing
cash flow during that period by more than $250 million. The move will further
reduce the sensitivity of reserves to a lower gold price.
Strategy and Outlook
- --------------------
The combination of these actions coupled with on-going cost reductions
significantly strengthens the company's operating flexibility and financial
profile.
In addition, a revised mining plan contemplates higher production levels in
Nevada than previously anticipated due to better facility optimization and
stockpile utilization. As a result, Mr. Cambre said the company expects to
maintain production of between 3.8 million and 4 million equity ounces of gold
per year for the next two years. Total cash costs are expected to be under $190
an ounce, with total production costs, including depreciation, depletion and
amortization, of under $240 an ounce. While funding a focused exploration
program of $55 million to $60 million a year, the company expects to further
reduce general and administrative costs to $11 an equity ounce. Capital
spending, including the company's share of investments in Batu Hijau, will be
under $300 million a year through 2000.
As a consequence of these actions, Mr. Cambre said the company's projected
break-even gold price has been reduced by approximately $15 an ounce from $290
in 1998.
"Our focus remains on maximizing cash flow so that even if the gold
price remains at the current level, we will be able to fund our growth
requirements and take advantage of new opportunities without additional
borrowing," Mr. Cambre said. Even if the gold price remains depressed, the
company expects to be able to reduce debt in this environment. Higher
realizations will be earmarked for additional debt reduction.
Mr. Cambre said the Batu Hijau project in Indonesia is 80 percent
complete and anticipates an on-time start-up in the fourth quarter of this year.
The total cost of the project is expected to come in below the $1.9 billion
originally budgeted. Newmont's share of production is expected to reach 175,000
ounces of gold and 270 million pounds of copper in 2000, rising to 325,000
ounces of gold and nearly 400 million pounds of copper by 2002. With projected
cash costs of 50-to-55 cents per pound of copper during the first five years and
decreasing thereafter, Batu Hijau is expected to be a significant contributor of
cash flow for more than 20 years.
(MORE)
<PAGE>
NEWMONT MINING CORPORATION AND SUBSIDIARIES
FINANCIAL AND OPERATING HIGHLIGHTS
(IN MILLIONS, EXCEPT PER SHARE AND OUNCES)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Years Ended
December 31, December 31,
-------------------- --------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales $ 351.9 $ 412.2 $1,453.9 $1,572.8
======== ======== ======== ========
Net income before unusual items $ 5.8 $ 41.6 $ 69.2 $ 166.3
Unusual items (after tax and
minority interest):
Write-down of assets (424.7) -- (424.7) --
Cumulative effect of expensing
start-up costs -- -- (32.9) --
Current year effect of expensing
start-up costs (2.5) -- (5.0) --
Merger and related expenses -- (3.0) -- (97.9)
-------- -------- -------- --------
Net income (loss) $ (421.4) $ 38.6 $ (393.4) $ 68.4
======== ======== ======== ========
Per share:
Before unusual items $ 0.03 $ 0.27 $ 0.44 $ 1.07
Unusual items (after tax and
minority items):
Write-down of assets (2.55) -- (2.67) --
Cumulative effect of expensing
start-up costs -- -- (0.21) --
Current year effect of expensing
start-up costs (0.01) -- (0.03) --
Merger and related expenses -- (0.02) -- (0.63)
-------- -------- -------- --------
Net income (loss) $ (2.53) $ 0.25 $ (2.47) $ 0.44
======== ======== ======== ========
Total gold production included
In financial statements (000 ozs.) 1,176.9 1,262.1 4,720.6 4,478.7
Equity gold production (000 ozs.) 996.0 1,124.2 4,070.7 3,956.8
Total cash cost of equity ounces $ 181 $ 185 $ 183 $ 187
Total production cost of equity ounces $ 246 $ 244 $ 249 $ 250
Average realized price per equity ounce $ 300 $ 330 $ 310 $ 354
Average spot price realized per ounce $ 295 $ 297 $ 295 $ 327
</TABLE>
(more)
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NEWMONT MINING CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME AND COMPREHENSIVE INCOME
(IN MILLIONS, EXCEPT PER SHARE)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Years Ended
December 31, December 31,
-------------------- ---------------------
1998 1997 1998 1997
---------- -------- --------- ----------
<S> <C> <C> <C> <C>
Sales and other income
Sales $ 351.9 $412.2 $1,453.9 $1,572.8
Dividends, interest and other 4.6 4.4 21.0 55.2
------- ------ -------- --------
356.5 416.6 1,474.9 1,628.0
------- ------ -------- --------
Costs and expenses
Costs applicable to sales 200.9 213.5 824.9 790.5
Depreciation, depletion and amortization 72.5 68.8 289.1 265.8
Exploration and research 16.5 23.9 68.4 98.4
General and administrative 11.2 15.8 49.7 66.4
Interest, net of capitalized interest 18.7 19.2 78.8 77.1
Merger expenses and related write-offs - 5.0 - 162.7
Write-down of assets 614.9 9.5 614.9 9.5
Other 6.6 13.0 11.0 25.7
------- ------ -------- --------
941.3 368.7 1,936.8 1,496.1
------- ------ -------- --------
Income (loss) before equity income, taxes,
minority interest and cumulative effect of
change in accounting principle (584.8) 47.9 (461.9) 131.9
Equity in loss of affiliated companies (4.3) - (9.2) -
Minority interest in income of Minera Yanacocha (23.5) (15.5) (66.2) (66.9)
Minority interest in income of Newmont Gold
Company - (2.6) (4.1) (4.5)
------- ------ -------- --------
Pretax Income (612.6) 29.8 (541.1) 60.5
Income tax benefit 191.2 8.8 180.9 7.9
------- ------ -------- --------
Earnings (loss) before cumulative effect of
change in accounting principle (421.4) 38.6 (360.5) 68.4
Cumulative effect of change in accounting
principle -- - (32.9) -
------- ------ -------- --------
Net income (loss) and comprehensive
(loss) $(421.4) $ 38.6 $ (393.4) $ 68.4
======= ====== ======== ========
Net income (loss) per common share, basic
and diluted $ (2.53) $ 0.25 $ (2.47) $ 0.44
======= ====== ======== ========
Weighted average number of shares of
common stock outstanding 166.5 156.5 159.0 156.2
Cash dividends declared per common share $ 0.03 $ 0.03 $ 0.12 $ 0.39
</TABLE>
Excluding unusual items, net income for the three months and twelve months ended
December 31, 1998 was $5.8 million ($0.03 per share) and $69.2 million ($0.44
per share), respectively. For the same periods in 1997, net income excluding
unusual items was $41.6 million ($0.27 per share) and $166.3 million ($1.07 per
share), respectively.
(more)
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NEWMONT MINING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
(UNAUDITED)
<TABLE>
<CAPTION>
December 31, December 31,
1998 1997
------------ ------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 79.1 $ 146.2
Other current assets 434.0 495.2
-------- --------
Current assets 513.1 641.4
Other assets, primarily property, plant
and equipment 2,673.7 2,972.6
-------- --------
Total assets $3,186.8 $3,614.0
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 164.7 $ 325.4
Short-term debt and current portion of
long-term debt 47.6 69.1
Long-term debt 1,201.1 1,179.4
Other liabilities 240.9 280.7
Minority interest in Minera Yanacocha 92.8 62.3
Minority interest in Newmont Gold - 106.0
Stockholders' equity 1,439.5 1,591.1
-------- --------
Total liabilities and stockholders' equity $3,186.8 $3,614.0
======== ========
</TABLE>
CONSOLIDATED CASH FLOW INFORMATION
<TABLE>
<CAPTION>
For Years Ended
December 31,
1998 1997
-------- --------
<S> <C> <C>
Operating activities
Net income (loss) $(393.4) $ 68.4
Adjustments to reconcile net income to net
cash provided by operating activities 813.1 325.1
------- -------
419.7 393.5
Change in working capital (46.2) (109.7)
------- -------
Net cash provided by operating activities 373.5 283.8
INVESTING ACTIVITIES
Additions to property, plant and mine development (216.0) (415.1)
Investments in affiliates and Other (204.8) (10.0)
------- -------
Net cash used in investing activities (420.8) (425.1)
FINANCING ACTIVITIES
Net borrowings 0.2 105.2
Proceeds from issuance of common stock 0.3 12.6
Dividends paid (19.1) (54.5)
Other (1.2) (2.8)
------- -------
Net cash (used in) provided by financing activities (19.8) 60.5
------- -------
Net decrease in cash and cash equivalent (67.1) (80.8)
Cash and cash equivalents at beginning of period 146.2 227.0
------- -------
Cash and cash equivalents at end of period $ 79.1 $ 146.2
======= =======
</TABLE>
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