<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 SEPTEMBER 30, 1999
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
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 167,607,136 shares of common stock outstanding on November 11, 1999.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NEWMONT MINING CORPORATION AND SUBSIDIARIES
Statements of Consolidated Operations
(In thousands, except per share)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
------------------------------
1999 1998
------------- ------------
<S> <C> <C>
Sales and other income
Sales $327,964 $349,918
Dividends, interest and other 9,874 2,654
-------- --------
337,838 352,572
-------- --------
Costs and expenses
Costs applicable to sales 206,567 206,522
Depreciation, depletion and amortization 60,703 72,886
Exploration and research 14,310 18,915
General and administrative 12,562 11,718
Interest, net of capitalized interest of $6,498
and $4,027, respectively 14,662 19,448
Other 4,039 (1,074)
-------- ---------
312,843 328,415
-------- --------
Operating income 24,995 24,157
Unrealized mark-to-market loss on written call options (51,343) --
------- --------
Pre-tax income (loss) before minority interest, equity loss and
cumulative effect of a change in accounting principle (26,348) 24,157
Income tax benefit 7,816 3,288
Minority interest in income of Minera Yanacocha (19,151) (19,349)
Minority interest in income of Newmont Gold Company -- (415)
Equity loss of affiliate (1,352) (1,588)
-------- --------
Net income (loss) $(39,035) $ 6,093
======== ========
Net income (loss) per common share, basic and diluted $ (0.23) $ 0.04
======== ========
Basic weighted average shares outstanding 167,523 156,518
Diluted weighted average shares outstanding 167,523 156,518
Cash dividends declared per Newmont Mining Corporation common $ 0.03 $ 0.03
share ========= =========
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE> 3
NEWMONT MINING CORPORATION AND SUBSIDIARIES
Statements of Consolidated Operations
(In thousands, except per share)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1999 1998
------------ ------------
<S> <C> <C>
Sales and other income
Sales $ 970,860 $1,101,947
Dividends, interest and other 30,176 16,417
---------- ----------
1,001,036 1,118,364
Costs and expenses
Costs applicable to sales 601,016 623,964
Depreciation, depletion and amortization 180,651 216,536
Exploration and research 40,210 51,905
General and administrative 37,837 38,477
Interest, net of capitalized interest of $15,936
and $9,442 respectively 50,139 60,092
Other 8,359 4,447
---------- ----------
918,212 995,421
---------- ----------
Operating income 82,824 122,943
Unrealized mark-to-market loss on written call options (51,343) --
---------- ----------
Pre-tax income before minority interest, equity loss and
cumulative effect of a change in accounting principle 31,481 122,943
Income tax benefit (expense) 102 (10,329)
Minority interest in income of Minera Yanacocha (44,273) (42,654)
Minority interest in income of Newmont Gold Company -- (4,093)
Equity loss of affiliate (9,333) (4,896)
---------- ----------
Net income (loss) before cumulative effect of change in
accounting principle (22,023) 60,971
Cumulative effect of a change in accounting principle, net -- (32,924)
---------- ----------
Net income (loss) $ (22,023) $ 28,047
========== ==========
Net income (loss) before cumulative effect of a change in
accounting principle per common share, basic and diluted $ (0.13) $ 0.39
========== ==========
Net income (loss) per common share, basic and diluted $ (0.13) $ 0.18
========== ==========
Basic weighted average shares outstanding 167,412 156,502
Diluted weighted average shares outstanding 167,535 156,502
Cash dividends declared per Newmont Mining Corporation common
share $ 0.09 $ 0.09
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE> 4
NEWMONT MINING CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 20,745 $ 79,086
Short-term investments 10,683 11,802
Accounts receivable 40,286 52,066
Put option premium 23,085 --
Inventories 317,363 280,371
Other current assets 78,807 89,755
----------- ----------
Current assets 490,969 513,080
Property, plant and mine development, net 1,988,933 2,048,707
Investment in Batu Hijau 386,959 277,221
Long-term inventory 182,680 159,674
Other long-term assets 233,662 188,072
----------- ----------
Total assets $ 3,283,203 $3,186,754
=========== ==========
Liabilities
Current portion of long-term debt $ 28,096 $ 47,575
Accounts payable 34,707 37,943
Other accrued liabilities 130,256 126,825
----------- ----------
Current liabilities 193,059 212,343
Long-term debt 1,073,468 1,201,131
Reclamation and remediation liabilities 100,810 94,840
Deferred revenue from sale of future
production 137,198 --
Fair value of written call options 88,956 --
Other long-term liabilities 162,713 146,099
----------- ----------
Total liabilities 1,756,204 1,654,413
----------- ----------
Contingencies (Notes 3 and 10)
Minority interest in Minera Yanacocha 117,621 92,808
----------- ----------
Stockholders' equity
Common stock 268,128 267,544
Additional paid-in capital 1,067,353 1,060,803
Retained earnings 73,897 111,186
----------- ----------
Total stockholders' equity 1,409,378 1,439,533
----------- ----------
Total liabilities and
stockholders' equity $ 3,283,203 $3,186,754
=========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE> 5
NEWMONT MINING CORPORATION AND SUBSIDIARIES
Statements of Consolidated Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------
1999 1998
----------- -----------
<S> <C> <C>
Operating activities:
Net income (loss) $ (22,023) $ 28,047
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation, depletion and amortization 180,651 216,536
Deferred taxes (46,462) (16,981)
Gain on sale of assets, net (19,462) --
Unrealized loss on written call options 51,343 --
Amortization of capitalized mining costs 16,188 42,220
Amortization of put option premium 12,222 --
Undistributed earnings of affiliates 9,333 14,469
Minority interest, net of dividends 24,812 28,766
Cumulative effect of change in accounting
principle -- 32,924
Other (2,158) (8,502)
(Increase) decrease in operating assets:
Accounts receivable 17,873 23,483
Inventories (27,099) 6,268
Other assets (12,027) (6,057)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses (298) (83,520)
Other liabilities 22,300 (849)
--------- ----------
Net cash provided by operating activities 205,193 276,804
--------- ---------
Investing activities:
Additions to property, plant and mine development (159,641) (175,303)
Advances to joint venture and affiliates, net (117,971) (96,548)
Proceeds from sale of future gold production, net 137,198 --
Proceeds from sale of assets 40,101 --
Acquisition of additional interest in Minera
Yanacocha -- (72,367)
Other (20) 8,089
--------- ---------
Net cash used in investing activities (100,333) (336,129)
--------- ---------
Financing activities:
Repayments of long-term borrowings (274,154) (95,017)
Proceeds from long-term borrowings 127,000 104,000
Net decrease in short-term borrowings -- (25,771)
Dividends paid on common stock (15,069) (14,085)
Other (978) (660)
--------- ---------
Net cash used in financing activities (163,201) (31,533)
--------- ---------
Net change in cash and cash equivalents (58,341) (90,858)
Cash and cash equivalents at beginning of period 79,086 146,232
--------- ---------
Cash and cash equivalents at end of period $ 20,745 $ 55,374
========= =========
Supplemental information:
Interest paid, net of amounts capitalized of
$15,936 and $9,442, respectively $ 56,600 $ 68,584
Income taxes paid $ 22,862 $ 33,123
</TABLE>
See Notes to Consolidated Financial Statements
5
<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 "Company") 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 Company included in its 1998
Annual Report on Form 10-K.
Prior to October 7, 1998, NMC owned approximately 93.75% of Newmont Gold
Company's ("NGC") common stock, through which all of NMC's operations are
conducted. On October 7, 1998, NMC acquired the remaining 6.25% interest in NGC
through the merger of a wholly-owned subsidiary of NMC into NGC.
Certain prior year amounts have been reclassified to conform to the current
year presentation.
(2) Inventories
<TABLE>
<CAPTION>
AT SEPTEMBER 30, AT DECEMBER 31,
1999 1998
---------------- ---------------
(IN THOUSANDS)
<S> <C> <C>
Current:
Ore and in-process inventories $160,944 $138,341
Precious metals 78,621 62,642
Materials and supplies 76,722 78,254
Other 1,076 1,134
-------- --------
$317,363 $280,371
======== ========
Non-current:
Ore in stockpiles $182,680 $159,674
======== ========
</TABLE>
Ore and in-process inventories at September 30, 1999 reflected a
reclassifcation from non-current ore in stockpiles and deferred mining costs.
(3) Batu Hijau
The Company and Sumitomo Corporation ("Sumitomo") entered into a definitive
partnership agreement to develop and operate the Batu Hijau copper/gold deposit
in Indonesia. Batu Hijau contains proven and probable reserves of 10.6 billion
pounds of copper (4.8 billion equity pounds) and 11.8 million ounces of gold
(5.3 million equity ounces). Start-up is progressing during the fourth quarter
of 1999, with a projected mine life in excess of 20 years. The estimated cost
for development of the Batu Hijau mine is expected to be approximately $1.8
billion.
The Company has an indirect 45% interest in the entity that owns the Batu
Hijau project and Sumitomo has an indirect 35% interest. The remaining 20%
interest is held by an unrelated Indonesian company. Until recouping its
construction investment, including interest, the Company will recognize 56.25%
of Batu Hijau's income. As a result of the ownership structure, the Company
accounts for its investment in Batu Hijau as an equity investment and at
September 30, 1999 and December 31, 1998, such investment was $387.0 million and
$277.2 million, respectively. Differences between 56.25% of the partnership's
net assets and the Company's investment include (1) $220 million for the fair
market value adjustment recorded by the partnership (in conjunction with the
Company's initial contribution of its investment in the entity that owns the
project), (2) $26 million for intercompany charges and (3) $122 million for the
fair market value adjustment recorded by the Company (in conjunction with its
acquisition of the minority interest in NGC). These amounts will be amortized or
depreciated upon commencement of production. The Company's investment also
excludes $42 million for exploration expenses incurred prior to the formation of
the partnership.
Project development is funded by $1.0 billion in third party financings and
$0.9 billion from the Company and
6
<PAGE> 7
Sumitomo. The financings are guaranteed by the Company and Sumitomo, 56.25% and
43.75%, respectively, until project completion tests are met (except for
political risk, which is born by the lenders), and will be non-recourse to the
Company and Sumitomo thereafter (except for a contingent obligation to fund an
additional $125 million). Repayment of borrowings under the financings will be
over a 13-year period beginning the earlier of six months after project
completion or June 15, 2001, and will bear interest at blended fixed and
floating rates.
Following is summarized financial information for the partnership (in
thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPT. 30, NINE MONTHS ENDED SEPT. 30,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ -- $ 11 $ -- $ 88
Loss before cumulative effect of a change in accounting
principle (3,312) (118) (18,583) (3,537)
Net loss (3,312) (5,382) (18,583) (20,443)
Dividends received $ -- $ -- $ -- $ --
</TABLE>
<TABLE>
<CAPTION>
AT SEPTEMBER 30, AT DECEMBER 31,
1999 1998
---------------- ---------------
<S> <C> <C>
Current assets $ 92,579 $ 17,576
Property, plant and mine development,
net 1,814,739 1,430,260
Other assets 154,970 104,238
Current liabilities 152,529 153,066
Long-term debt 1,059,327 640,000
Minority interest $ 35,455 $ 17,120
</TABLE>
(4) Deferred Revenue
In July 1999, the Company entered into a prepaid forward sale contract for
approximately 483,333 ounces of gold, with initial proceeds of $137.2 million,
for delivery in June 2005, 2006 and 2007. Such proceeds were recorded as
Deferred Revenue from the Sale of Future Production and will be recognized in
income when the related gold is delivered. Additional proceeds will be
determined at each delivery date based on the excess of the then existing market
price (not to exceed $380 per ounce) over $300 per ounce. The prepaid forward
sale contract also included annual delivery requirements of approximately 35,900
ounces beginning June 2000 through June 2007. Newmont has entered into forward
purchase contracts at prices increasing from $263 per ounce in 2000 to $354 per
ounce in 2007 to coincide with these delivery commitments.
(5) Option Contracts
In late July and early August 1999, the Company purchased put option
contracts for 2.85 million ounces of gold, with a strike price of $270 per
ounce. This purchase was paid for by selling call options contracts for 2.35
million ounces at the strike prices noted below and thus no net premium was
incurred. Put option contracts for one million ounces were subject to
termination if the market price reached $270 per ounce at any time prior to such
contracts' expiration date, which was August 2000 through July 2001. These put
option contracts were thus terminated in September 1999. As of September 30,
1999, the following contracts were outstanding:
<TABLE>
<CAPTION>
1999 2000 2004 2005 2008 2009
----------- ------------- ------------ ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Put options purchased:
Ounces 400,000 1,183,333
Strike price $270 $270
Call options sold:
Ounces 250,000 250,000 1,000,000 850,000
Average price $350 $350 $386 $385
</TABLE>
The put options qualify for deferral accounting such that gains and losses
on the contracts are recognized as the designated production is delivered or as
the options expire. The initial fair value of the options of $37.6 million was
recorded as Put Option Premium and is amortized over the term of the options. At
September 30, 1999, $12.2 million was amortized, including the premium
associated with terminated options. The call option contracts, with an initial
fair value of $37.6 million, are marked to market at each reporting date and on
September 30, 1999, the fair value of these contracts was $89 million, resulting
in a non-cash, unrealized loss of $51.3 million. Call options in 2004 and 2005
terminate if the market price is $240 per ounce or lower at any time prior to
expiration.
(6) Dividends, Interest and Other Income
In the nine months ended September 30, 1999, Dividends, interest and other
income included a $13 million gain from the sale of the True North exploration
property in Alaska and an $8 million gain from the sale of an investment in
another mining company.
7
<PAGE> 8
(7) Earnings Per Common Share
Basic and diluted earnings per share calculations were based on 167,523,000
weighted-average shares for the three months ended September 30, 1999 and on
156,518,000 shares for the three months ended September 30, 1998. Basic and
diluted earnings per share calculations were based on 167,412,000 and
167,535,000 weighted-average shares, respectively, for the nine months ended
September 30, 1999 and on 156,502,000 for the nine months ended September
30,1998. The weighted average shares used for diluted earnings per share
calculations included the number of additional common shares, if any, that would
have been outstanding if potentially dilutive common shares had been issued
(such as common share equivalents for employee stock options).
(8) Accounting Change
The Company adopted Statement of Position 98-5 effective January 1, 1998.
The change resulted in expensing certain costs incurred in the start-up phase of
various projects. The quarter ended June 30, 1998 was restated to reflect the
accounting change. Previously capitalized start-up costs (incurred prior to
January 1, 1998) of $32.9 million ($0.21 per share), net of tax and minority
interest, were reflected as the cumulative effect of the accounting change in
the first quarter of 1998.
(9) Segment Information
In 1998, the Company adopted the Statement of Financial Accounting Standards
("SFAS") No. 131, "Disclosures about Segments of an Enterprise and Related
Information" that established standards for reporting information about
operating segments. The Company predominantly operates in a single industry as a
worldwide corporation engaged in gold production, exploration for gold and
acquisition of gold properties. The Company has operations in the United States,
Mexico, Peru, Indonesia and Uzbekistan and its reportable segments are based on
the geographic location of these operations. Earnings from operations do not
include general corporate expenses, interest (except project-specific interest)
or income taxes (except for equity investments).
Financial information relating to the Company's consolidated segments is as
follows (in millions):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, 1999
-------------------------------------------------------------------------------------
NORTH AMERICAN MINERA ZARAFSHAN-
OPERATIONS YANACOCHA* MINAHASA NEWMONT OTHER CONSOLIDATED
-------------- ---------- -------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $169.8 $113.9 $32.0 $20.6 $ (8.3) $ 328.0
Interest income -- 1.1 -- -- 1.1 2.2
Interest expense 0.1 1.7 -- 0.7 12.2 14.7
Depreciation and amortization 33.1 17.6 5.9 2.8 1.3 60.7
Pre-tax income (loss) before
Minority interest and Equity
loss (9.6) 49.2 15.5 5.1 (86.5) (26.3)
Capital expenditures 18.4 56.4 4.4 0.7 2.4 82.3
</TABLE>
*Not reduced for minority interest
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, 1998
-------------------------------------------------------------------------------------
NORTH AMERICAN MINERA ZARAFSHAN-
OPERATIONS YANACOCHA* MINAHASA NEWMONT OTHER CONSOLIDATED
-------------- ---------- -------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Sales $210.2 $109.5 $ 18.2 $ 12.0 $ -- $ 349.9
Interest income -- 0.7 0.1 -- 1.1 1.9
Interest expense 0.1 2.1 -- 1.2 16.0 19.4
Depreciation and amortization 48.8 13.8 5.6 3.1 1.6 72.9
Pre-tax income (loss) before
Minority interest, Equity loss
and Cumulative effect of a change
in accounting principle (1.8) 57.6 7.3 (1.0) (37.9) 24.2
Capital expenditures 28.3 27.9 1.4 0.3 2.2 60.1
</TABLE>
*Not reduced for minority interest
8
<PAGE> 9
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1998
-------------------------------------------------------------------------------------
NORTH AMERICAN MINERA ZARAFSHAN-
OPERATIONS YANACOCHA* MINAHASA NEWMONT OTHER CONSOLIDATED
-------------- ---------- -------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Sales $533.5 $310.2 $81.2 $54.3 $ (8.3) $970.9
Interest income -- 3.2 0.1 -- 3.7 7.0
Interest expense 0.3 6.0 -- 2.1 41.7 50.1
Depreciation and amortization 98.2 52.6 17.4 8.4 4.0 180.6
Pre-tax income (loss) before
minority interest and equity
LOSS 9.9 117.5 35.4 10.0 (143.5) 31.5
Capital expenditures 46.6 90.2 9.1 2.2 11.5 159.6
</TABLE>
*Not reduced for minority interest
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1998
-------------------------------------------------------------------------------------
NORTH AMERICAN MINERA ZARAFSHAN-
OPERATIONS YANACOCHA* MINAHASA NEWMONT OTHER CONSOLIDATED
-------------- ---------- -------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Sales $711.7 $283.3 $67.3 $39.6 $ -- $1,101.9
Interest income -- 2.5 0.1 -- 3.4 6.0
Interest expense 0.3 7.2 -- 4.0 48.6 60.1
Depreciation and amortization 146.4 41.8 16.8 9.2 2.3 216.5
Pre-tax income (loss) before
minority interest, equity loss
and cumulative effect of a change
in accounting principle 85.1 124.6 26.4 (1.8) (111.4) 122.9
Cumulative effect of a change in
accounting principle (10.6) -- (1.4) (2.5) (18.4) (32.9)
Capital expenditures 92.8 62.8 6.5 0.9 12.3 175.3
</TABLE>
*Not reduced for minority interest
(10) Contingencies
(a) Environmental Obligations
The Company'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 Company 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 Company has made, and
expects to make in the future, expenditures to comply with such laws and
regulations, but cannot predict the amount of such future expenditures.
Estimated future reclamation and remediation costs are based principally on
legal and regulatory requirements. At September 30, 1999 and December 31, 1998,
$65.5 million and $56.0 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.
These appeals seek to impose mitigation and other conditions on the mine
operations. The Company 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 that may have a material adverse effect on
the Company's financial position or results of operations.
In addition, the Company 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 Company 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 Company's best
estimate of its liability for these matters, $42.7 million and $44.9 million
were accrued for such obligations at September 30, 1999 and December 31, 1998,
respectively. These amounts are included in Other accrued liabilities and
Reclamation and remediation liabilities. Depending upon the ultimate resolution
of these matters, the Company 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 September 30, 1999. The amounts accrued for these matters
are reviewed periodically based upon facts and circumstances available at the
time. Changes in estimates are charged to Costs and expenses, Other in the
period estimates are revised.
9
<PAGE> 10
Details about certain of the more significant sites involved are discussed
below.
Idarado Mining Company ("Idarado") - 80.1% owned
In July 1992, the Company and Idarado signed a consent decree with the State
of Colorado ("State") that 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 is substantially complete. 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 Company have obtained a $5.2
million letter of credit to secure their potential obligations under the consent
decree.
Resurrection Mining Company ("Resurrection") -- 100% owned
The Company, Resurrection and other defendants have been named in lawsuits
filed by the State of Colorado, under the Superfund Act in 1983 and subsequently
consolidated with a lawsuit filed by the U.S. Environmental Protection Agency
("EPA") in 1986. These proceedings seek to compel the defendants to remediate
the impacts of pre-existing, historic mining activities near Leadville, Colorado
that date back to the mid-1800's, which the government agencies claim are
causing substantial environmental problems in the area.
In 1988 and 1989, the EPA issued administrative orders with respect to one
area on the site and the defendants have collectively implemented those orders
by constructing a water treatment plant, which was placed in operation in early
1992. Remaining remedial work for this area primarily consists of environmental
monitoring and maintenance activities.
The parties have entered into a consent decree with respect to the remaining
areas that 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
Company cannot yet determine the full extent or cost of its share of the
remedial action that will be required. The government agencies may also seek to
recover for damages to natural resources.
Dawn Mining Company LLC ("Dawn") -- 51% owned
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 Company (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 Company liable for future reclamation or remediation work at
the mine or millsite. In early 1999, the EPA proposed that the mine be included
on the National Priorities List under CERCLA. If asserted, the Company will
vigorously contest any such claims as to its liability. The Company cannot
reasonably predict the likelihood or outcome of any future action against Dawn
or the Company arising from this matter.
Dawn has received a license for a mill closure plan that could generate
funds to close and reclaim both the mine and the mill. The license is being
challenged by third parties.
(b) Additional Interest in Minera Yanacocha
The Company has an interest in Minera Yanacocha, a gold mining operation
located in Peru, that began production in 1993. Prior to 1997, that interest was
38% and was accounted for on an equity basis. Beginning in 1997, Minera
Yanacocha was consolidated into the Company's financial statements following the
acquisition of an additional 13.35% interest. The acquisition was disputed and,
in June 1998, the Peruvian Supreme Court resolved the dispute in favor of the
Company as described below.
10
<PAGE> 11
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. The Company 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 September 1996, the trial court ruled in favor
of the Company and Buenaventura and held that the preemptive rights were
triggered in November 1993, and that the value of the 24.7% interest was $109.3
million. In June 1998, the Peruvian Supreme Court issued a resolution upholding
the decision.
In spite of the final decision of the Peruvian Supreme Court, in October
1998, BRGM, through its subsidiary Compagnie Miniere International Or S.A.
("Mine Or"), filed with the International Centre for Settlement of Investment
Disputes a request for arbitration against the Republic of Peru. The request
alleges that the decision of the Peruvian courts wrongfully deprived Mine Or of
its shares in Minera Yanacocha (which Mine Or values at approximately $560
million) and seeks restitution and damages from the Republic of Peru.
While the Company is not a party to the arbitration, it believes that Mine
Or's claims are unfounded. It is unclear at this time what effect, if any, the
arbitration might have on the Company.
(c) Forward Sale Contracts
As described in Note (4), the Company entered into a prepaid forward sale
contract for approximately 483,333 ounces of gold, with initial net proceeds of
$137.2 million, for delivery in June 2005, 2006 and 2007. Additional proceeds
will be determined at each delivery date based on the excess of the then
existing market price (not to exceed $380 per ounce) over $300 per ounce. The
prepaid forward sale contract also includes annual delivery requirements of
approximately 35,900 ounces beginning June 2000 through June 2007. Newmont has
entered into forward purchase contracts at prices ranging from $263 to $351 per
ounce to coincide with these annual deliveries.
In 1996, the Company entered into a forward sales contract that continues
through December 2000 for 125,000 ounces of gold per year, from its Minahasa
property in Indonesia, at an average price of $454 an ounce.
(11) Condensed Consolidating Financial Statements
The following condensed consolidating financial statements of Newmont Mining
Corporation should be read in conjunction with the consolidated financial
statements and the notes thereto included in its Annual Report on Form 10-K for
the year ended December 31, 1998.
<TABLE>
<CAPTION>
NEWMONT NEWMONT NEWMONT
CONSOLIDATING STATEMENT OF OPERATIONS MINING GOLD OTHER ELIMI- MINING CORP.
(IN MILLIONS) CORP. COMPANY SUBSIDIARIES NATIONS CONSOLIDATED
------------- ----------- --------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Three Months Ended September 30, 1999
Sales and other income
Sales $ -- $ 84.4 $243.6 $ -- $328.0
Dividends, interest and other
- intercompany -- 4.5 -- (4.5) --
Dividends, interest and other -- 0.2 10.1 (0.5) 9.8
------ ------ ------ ------ ------
-- 89.1 253.7 (5.0) 337.8
------ ------ ------ ------ ------
Costs and expenses
Costs applicable to sales -- 65.6 141.5 (0.5) 206.6
Depreciation, depletion and amortization -- 18.8 41.9 -- 60.7
Exploration and research -- 5.4 8.9 -- 14.3
General and administrative -- 10.9 1.6 -- 12.5
Interest expense - intercompany -- -- 4.5 (4.5) --
Interest, net of capitalized interest -- 8.3 6.4 -- 14.7
Other -- 0.7 3.3 -- 4.0
------ ------ ------ ------ ------
-- 109.7 208.1 (5.0) 312.8
------ ------ ------ ------ ------
Operating income (loss) -- (20.6) 45.6 -- 25.0
Unrealized mark-to-market loss on call
options -- (51.3) -- -- (51.3)
------ ------ ------ ------
Pre-tax income (loss) before minority
interest and equity loss -- (71.9) 45.6 -- (26.3)
Income tax (expense) benefit -- 21.0 (13.2) -- 7.8
Minority interest in income of Minera
Yanococha -- -- (19.2) -- (19.2)
Equity in income (loss) of subsidiaries (39.0) 11.9 -- (27.1) 0.0
Equity in loss of affiliate -- -- (1.3) -- (1.3)
------ ------ ------ ------ ------
Net income (loss) $(39.0) $(39.0) $ 11.9 $(27.1) $(39.0)
====== ====== ====== ====== ======
</TABLE>
11
<PAGE> 12
<TABLE>
<CAPTION>
NEWMONT NEWMONT NEWMONT
CONSOLIDATING STATEMENT OF OPERATIONS MINING GOLD OTHER ELIMI- MINING CORP.
(IN MILLIONS) CORP. COMPANY SUBSIDIARIES NATIONS CONSOLIDATED
------------------------------------- ------------- ----------- --------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
THREE MONTHS ENDED SEPTEMBER 30, 1998
Sales and other income
Sales $ -- $118.5 $231.4 $ -- $ 349.9
Dividends, interest and other - intercompany -- 6.8 -- (6.8) --
Dividends, interest and other -- 0.3 2.4 (0.1) 2.6
------ ------ ------ ------ -------
-- 125.6 233.8 (6.9) 352.5
------ ------ ------ ------ -------
Costs and expenses
Costs applicable to sales -- 90.9 115.7 (0.1) 206.5
Depreciation, depletion and amortization -- 24.3 48.6 -- 72.9
Exploration and research -- 4.7 14.2 -- 18.9
General and administrative -- 11.5 0.2 -- 11.7
Interest expense - intercompany -- -- 6.8 (6.8) --
Interest, net of capitalized interest -- 11.4 8.0 -- 19.4
Other -- 0.4 (1.4) -- (1.0)
------ ------ ------ ------ -------
-- 143.2 192.1 (6.9) 328.4
------ ------ ------ ------ -------
Pre-tax income (loss) before minority interest
and equity loss -- (17.6) 41.7 -- 24.1
Income tax benefit (expense) -- 6.2 (2.9) -- 3.3
Minority interest in income of Minera Yanacocha -- -- (19.3) -- (19.3)
Minority interest in income of Newmont Gold
Company (0.4) -- -- -- (0.4)
Equity in income of subsidiaries 6.5 17.9 -- (24.4) 0.0
Equity in loss of affiliate -- -- (1.6) -- (1.6)
------ ------ ------ ------ -------
Net income $ 6.1 $ 6.5 $ 17.9 $(24.4) $ 6.1
====== ====== ====== ====== =======
NINE MONTHS ENDED SEPTEMBER 30, 1999
Sales and other income
Sales $ -- $291.1 $679.8 $ -- $ 970.9
Dividends, interest and other - intercompany -- 13.5 -- (13.5) --
Dividends, interest and other -- 6.1 24.5 (0.5) 30.1
------ ------ ------ ------ -------
-- 310.7 704.3 (14.0) 1,001.0
------ ------ ------ ------ ------
Costs and expenses
Costs applicable to sales -- 206.1 395.4 (0.5) 601.0
Depreciation, depletion and amortization -- 56.5 124.2 -- 180.7
Exploration and research -- 14.4 25.8 -- 40.2
General and administrative -- 35.6 2.2 -- 37.8
Interest expense - intercompany -- -- 13.5 (13.5) --
Interest, net of capitalized interest -- 30.0 20.1 -- 50.1
Other -- 4.7 3.7 -- 8.4
------ ------ ------ ------ -------
-- 347.3 584.9 (14.0) 918.2
------ ------ ------ ------ -------
Operating income (loss) -- (36.6) 119.4 82.8
Unrealized mark-to-market loss on call options -- (51.3) -- (51.3)
------ ------ ------ -------
Pre-tax income (loss) before minority interest
and equity loss -- (87.9) 119.4 -- 31.5
Income tax (expense) benefit -- 26.4 (26.3) -- 0.1
Minority interest in income of Minera Yanacocha -- -- (44.3) -- (44.3)
Equity in income (loss) of subsidiaries (22.0) 39.5 -- (17.5) 0.0
Equity in loss of affiliate -- -- (9.3) -- (9.3)
------ ------ ------ ------ -------
Net income (loss) $(22.0) $(22.0) $ 39.5 $(17.5) $ (22.0)
====== ====== ====== ====== =======
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
NEWMONT NEWMONT NEWMONT
CONSOLIDATING STATEMENT OF OPERATIONS MINING GOLD OTHER ELIMI- MINING CORP.
(IN MILLIONS) CORP. COMPANY SUBSIDIARIES NATIONS CONSOLIDATED
------------------------------------- ------------ ----------- --------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
NINE MONTHS ENDED SEPTEMBER 30, 1998
Sales and other income
Sales $ -- $371.1 $730.8 $ -- $1,101.9
Dividends, interest and other - intercompany -- 19.0 -- (19.0) --
Dividends, interest and other -- 9.5 7.7 (0.8) 16.4
----- ------ ------ ------ --------
-- 399.6 738.5 (19.8) 1,118.3
----- ------ ------ ------ --------
Costs and expenses
Costs applicable to sales -- 279.6 345.2 (0.8) 624.0
Depreciation, depletion and amortization -- 69.9 146.6 -- 216.5
Exploration and research -- 12.4 39.5 -- 51.9
General and administrative -- 36.7 1.8 -- 38.5
Interest expense - intercompany -- -- 19.0 (19.0) --
Interest, net of capitalized interest -- 34.2 25.9 -- 60.1
Other -- 0.1 4.3 -- 4.4
----- ------ ------ ------ --------
-- 432.9 582.3 (19.8) 995.4
----- ------ ------ ------ --------
Pre-tax income (loss) before minority
interest, equity loss and cumulative
effect of a change in accounting principle -- (33.3) 156.2 -- 122.9
Income tax benefit (expense) -- 11.6 (21.9) -- (10.3)
Minority interest in income of Minera Yanacocha -- -- (42.7) -- (42.7)
Minority interest in income of Newmont Gold
Company (4.1) -- -- -- (4.1)
Equity in loss of subsidiaries 29.9 50.8 -- (80.7) 0.0
Equity in loss of affiliate -- -- (4.9) -- (4.9)
----- ------ ------ ------ --------
Net income before cumulative effect of a
change in accounting principle 25.8 29.1 86.7 (80.7) 60.9
Cumulative effect of a change in accounting
principle 2.2 0.8 (35.9) -- (32.9)
----- ------ ------ ------ --------
Net income $28.0 $ 29.9 $ 50.8 $(80.7) $ 28.0
===== ====== ====== ====== ========
</TABLE>
<TABLE>
<CAPTION>
NEWMONT NEWMONT NEWMONT
CONSOLIDATING BALANCE SHEETS MINING GOLD OTHER ELIMI- MINING CORP.
(IN MILLIONS) CORP. COMPANY SUBSIDIARIES NATIONS CONSOLIDATED
---------------------------- ------------ ----------- --------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
AT SEPTEMBER 30, 1999
Cash and cash equivalents $ -- $ 6.2 $ 14.5 $ -- $ 20.7
Short-term investments -- -- 10.7 -- 10.7
Accounts receivable 7.1 368.5 34.4 (369.7) 40.3
Inventories -- 92.3 225.1 -- 317.4
Other current assets -- 31.2 70.7 -- 101.9
-------- -------- --------- --------- --------
Current assets 7.1 498.2 355.4 (369.7) 491.0
-------- -------- --------- --------- --------
Property, plant and mine development, net 824.0 1,165.0 -- 1,989.0
Investments in consolidated subsidiaries 1,402.3 1,215.6 -- (2,617.9) --
Investment in Batu Hijau -- -- 387.0 -- 387.0
Long-term inventory -- 174.8 7.8 -- 182.6
Other long-term assets -- 177.4 338.2 (282.0) 233.6
-------- -------- --------- --------- --------
Total assets $1,409.4 $2,890.0 $ 2,253.4 $(3,269.6) $3,282.2
======== ======== ========= ========= ========
Liabilities
Current portion of long-term debt $ -- $ 8.4 $ 19.7 $ -- $ 28.1
Accounts payable -- 15.3 382.0 (362.6) 34.7
Other accrued liabilities -- 46.9 83.4 -- 130.3
-------- -------- --------- --------- --------
Current liabilities -- 70.6 485.1 (362.6) 193.1
-------- -------- --------- --------- --------
Long-term debt -- 790.1 283.3 -- 1,073.4
Reclamation and remediation liabilities -- 28.4 72.4 -- 100.8
Deferred revenue from sale of future
production -- 137.2 -- -- 137.2
Fair value of call options -- 89.0 -- -- 89.0
Other long-term liabilities -- 372.4 79.4 (289.1) 162.7
-------- -------- --------- --------- --------
Total liabilities -- 1,487.7 920.2 (651.7) 1,756.2
-------- -------- --------- --------- --------
Minority interest -- -- 117.6 -- 117.6
-------- -------- --------- --------- --------
Stockholders' Equity
Common stock 268.1 -- 57.3 (57.3) 268.1
Additional paid-in capital 1,067.4 592.1 753.0 (1,345.1) 1,067.4
Retained earnings 73.9 810.2 405.3 (1,215.5) 73.9
-------- -------- --------- --------- --------
Total stockholders' equity $1,409.4 $1,402.3 $ 1,215.6 $(2,617.9) 1,409.4
-------- -------- --------- --------- --------
Total liabilities and stockholders'
equity $1,409.4 $2,890.0 $ 2,253.4 $(3,269.6) $3,283.2
======== ======== ========= ========= ========
</TABLE>
13
<PAGE> 14
<TABLE>
<CAPTION>
NEWMONT NEWMONT NEWMONT
CONSOLIDATING BALANCE SHEETS MINING GOLD OTHER ELIMI- MINING CORP.
(IN MILLIONS) CORP. COMPANY SUBSIDIARIES NATIONS CONSOLIDATED
---------------------------- ------------ ----------- --------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
AT DECEMBER 31, 1998
Cash and cash equivalents $ -- $ 21.6 $ 57.5 $ -- $ 79.1
Short-term investments -- -- 11.8 -- 11.8
Accounts receivable -- 445.6 30.0 (423.6) 52.0
Inventories -- 122.1 158.3 -- 280.4
Other current assets -- 33.0 56.8 -- 89.8
-------- -------- --------- --------- --------
Current assets -- 622.3 314.4 (423.6) 513.1
-------- -------- --------- --------- --------
Property, plant and mine development, net -- 856.5 1,192.2 -- 2,048.7
Investment in subsidiaries 1,444.6 2,817.9 -- (4,262.5) --
Investment in Batu Hijau -- -- 277.2 -- 277.2
Long-term inventory -- 143.3 16.4 -- 159.7
Other long-term assets -- 119.5 2,094.8 (2,026.3) 188.0
-------- -------- --------- --------- --------
Total assets $1,444.6 $4,559.5 $ 3,895.0 $(6,712.4) $3,186.7
======== ======== ========= ========= ========
Liabilities
Current portion of long-term debt $ -- $ 17.8 $ 29.8 $ -- $ 47.6
Accounts payable 5.1 17.2 439.2 (423.6) 37.9
Other accrued liabilities -- 57.2 69.6 -- 126.8
-------- -------- --------- --------- --------
Current liabilities 5.1 92.2 538.6 (423.6) 212.3
-------- -------- --------- --------- --------
Long-term debt -- 902.5 298.6 -- 1,201.1
Reclamation and remediation liabilities -- 26.3 68.5 -- 94.8
Other long-term liabilities -- 2,093.9 78.6 (2,026.3) 146.2
-------- -------- --------- --------- --------
Total liabilities 5.1 3,114.9 984.3 (2,449.9) 1,654.4
-------- -------- --------- --------- --------
Minority interest -- -- 92.8 -- 92.8
-------- -------- --------- --------- --------
Stockholders' Equity
Common stock 267.5 56.5 (56.5) 267.5
Additional paid-in capital 1,060.8 592.1 2,154.3 (2,746.4) 1,060.8
Retained Earnings 111.2 852.5 607.1 (1,459.6) 111.2
-------- -------- --------- --------- --------
Total stockholders' equity $1,439.5 $1,444.6 $ 2,817.9 $(4,262.5) $1,439.5
Total liabilities and stockholders'
equity $1,444.6 $4,559.5 $ 3,895.0 $(6,712.4) $3,186.7
======== ======== ========= ========= ========
</TABLE>
<TABLE>
<CAPTION>
NEWMONT NEWMONT NEWMONT
STATEMENT OF CONSOLIDATING CASH FLOWS MINING GOLD OTHER ELIMI- MINING CORP.
(IN MILLIONS) CORP. COMPANY SUBSIDIARIES NATIONS CONSOLIDATED
------------------------------------- ------------ ----------- --------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
NINE MONTHS ENDED SEPTEMBER 30, 1999
Operating activities
Net income (loss) $(22.0) $ (22.0) $ 39.5 $(17.5) $ (22.0)
Adjustments to reconcile net income to
net cash provided by operating
activities 42.1 28.8 158.2 (2.6) 226.5
Change in working capital (5.0) 4.4 1.3 -- 0.7
------ ------- ------- ------- -------
Net cash provided by (used for)
operating activities 15.1 11.2 199.0 (20.1) 205.2
------ ------- ------- ------- -------
Investing activities
Additions to property, plant and mine
development -- (21.8) (137.9) -- (159.7)
Proceeds from sale of future production -- 137.2 -- -- 137.2
Investments in affiliates and Other -- -- (77.9) -- (77.9)
------ ------- ------- ------- -------
Net cash provided by (used for)
investing activities -- 115.4 (215.8) -- (100.4)
------ ------- ------- ------- -------
Financing activities
Net repayments -- (121.8) (25.3) -- (147.1)
Dividends paid (15.1) (20.1) -- 20.1 (15.1)
Other -- -- (1.0) -- (1.0)
------ ------- ------- ------- -------
Net cash provided by (used for)
financing activities (15.1) (141.9) (26.3) 20.1 (163.2)
------ ------- ------- ------- -------
Net change in cash and cash equivalents 0.0 (15.3) (43.1) -- (58.4)
Cash and cash equivalents at beginning
of period -- 21.5 57.6 -- 79.1
------ ------- ------- ------- -------
Cash and cash equivalents at end of period $ -- $ 6.2 $ 14.5 $ -- $ 20.7
====== ======= ======= ======= =======
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
NEWMONT NEWMONT NEWMONT
STATEMENT OF CONSOLIDATING CASH FLOWS MINING GOLD OTHER ELIMI- MINING CORP.
(IN MILLIONS) CORP. COMPANY SUBSIDIARIES NATIONS CONSOLIDATED
------------------------------------- ------------ ----------- --------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
NINE MONTHS ENDED SEPTEMBER 30, 1998
Operating activities
Net income $ 28.0 $ 29.9 $ 50.8 $(80.7) $ 28.0
Adjustments to reconcile net income to
net cash provided by operating
activities (14.0) 44.0 213.7 65.7 309.4
Change in working capital -- (130.8) 70.2 -- (60.6)
------ ------- ------ ------ -------
Net cash provided by (used for) operating
activities 14.0 (56.9) 334.7 (15.0) 276.8
------ ------- ------ ------ -------
Investing activities
Additions to property, plant and mine
development -- (49.6) (125.7) -- (175.3)
Investments in affiliates and Other -- -- (160.8) -- (160.8)
------ ------- ------ ------ -------
Net cash used for investing activities -- (49.6) (286.5) -- (336.1)
------ ------- ------ ------ -------
Financing activities
Net borrowings (repayments) -- 45.2 (62.0) -- (16.8)
Dividends paid (14.0) (15.0) -- 15.0 (14.0)
Other -- -- (0.7) -- (0.7)
------ ------- ------ ------ -------
Net cash provided by (used for)
financing activities (14.0) 30.2 (62.7) 15.0 (31.5)
------ ------- ------ ------ -------
Net decrease in cash and cash equivalents 0.0 (76.3) (14.5) 0.0 (90.8)
Cash and cash equivalents at beginning of
period -- 85.1 61.1 -- 146.2
------ ------- ------ ------ -------
Cash and cash equivalents at end of period $ -- $ 8.8 $ 46.6 $ -- $ 55.4
====== ======= ====== ====== =======
</TABLE>
(12) Supplementary Data
The ratio of earnings to fixed charges for the nine months ended September
30, 1999 was 1.1. The Company guarantees certain third party debt; however, it
has not been and does not expect to be required to pay any amounts associated
with such debt. Therefore, related interest on such debt has not been included
in the ratio of earnings to fixed charges.
15
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The following provides information that management believes is relevant to
an assessment and understanding of the consolidated results of operations and
financial condition of Newmont Mining Corporation ("NMC") and its subsidiaries
(collectively, "Newmont"). The discussion should be read in conjunction with
Management's Discussion and Analysis included in Newmont's Annual Report on Form
10-K.
On October 7, 1998, NMC acquired the minority interest of Newmont Gold
Company ("NGC") and NGC became 100%-owned by NMC.
SUMMARY
For the three months and nine months ended September 30, 1999, Newmont
reported a net loss of $39.0 million ($0.23 per share) and $22.0 million ($0.13
per share). For the comparable 1998 periods, net income was $6.1 million ($0.04
per share) and $28.0 million ($0.18 per share), respectively. Earnings in 1999
included non-cash, unrealized charges of $41.3 million ($0.25 per share), net of
tax, related to put and call option contracts. Excluding these non-cash charges,
net income was $2.3 million ($0.02 per share) and $19.3 million ($0.12 per
share) for the third quarter and first nine months of 1999. Included in the 1998
nine-month period was an after-tax charge of $32.9 million ($0.21 per share) for
the cumulative effect of a change in accounting principle for start-up costs.
Start-up costs for the Batu Hijau copper/gold project in Indonesia, reflected in
Equity loss of affiliate, were $9.3 million ($0.06 per share) and $4.9 million
($0.03 per share) in the nine months ended September 30, 1999 and 1998,
respectively.
Production was 1,043,000 and 2,951,600 equity ounces of gold in the third
quarter and year-to-date 1999 periods, respectively, compared with 1,004,400 and
3,074,800 ounces in the same prior year periods. Cash costs per ounce were $174
and $179 for the third quarter and nine months ended September 30, 1999,
respectively, compared with $186 and $184 in the 1998 periods. Year-to-date 1999
average realized gold prices were $281 per equity ounce, $33 below those in the
1998 period when approximately 23% of production was sold under commodity
instruments at above-market prices.
MARKET CONDITIONS AND RISKS
COMMODITY PRICES
Changes in the market price of gold significantly affect Newmont's
profitability and cash flow. Gold prices can fluctuate widely and are affected
by numerous factors, such as demand, forward selling by producers, central bank
sales, purchases and lending, investor sentiment and production levels. During
1998, a decline in gold prices occurred concurrently with a strong U.S. dollar,
weakened economies in major global regions such as Asia and Russia, central bank
selling and lending and general uncertainties surrounding future actions of
central banks, especially those in the European Monetary Union. The gold price
fell to a 20-year low of $273 in August 1998 and recovered only modestly before
dropping to around $255 per ounce in July 1999 following a central bank gold
sale. On September 26, 1999, 15 European central banks announced that they would
limit the amount of their gold selling and lending over the next five years.
Following this announcement, gold market prices increased to $298 per ounce on
September 30, 1999, continued to rise through most of October 1999 and settled
back to a $290-per-ounce range in early November 1999.
Changes in the market price of copper will also affect Newmont's
profitability from its Batu Hijau project in Indonesia that is expected to
commence operations during the fourth quarter of 1999.
Newmont sells most of its gold production at market prices; therefore,
revenue, earnings and cash flow are highly leveraged to the gold price. As a
result of prolonged low gold prices prior to the central bank announcement
discussed above, Newmont entered into two put option and call option contracts
to provide a measure of price protection. As described in Note (5), Newmont
purchased near-term put option contracts for 2.85 million ounces of gold, with a
strike price of $270 per ounce. This purchase was paid for by selling call
option contracts for 2.35 million ounces, with strike prices between $350 and
$392 per ounce. Ounces subject to call option contracts represent approximately
4.5% of proven and probable reserves at December 31,1998 and expire in 2004
through 2009. Newmont has also utilized forward sales contracts in the past to
protect the selling price for certain anticipated gold production. Newmont will
continue to evaluate transactions that mitigate downside price exposure while
preserving the ability to participate in rising commodity price markets for its
gold and copper production.
While gold prices remain at historically low levels, Newmont continues to
pursue operating alternatives that maximize cash flow. During 1998, Newmont
reduced costs, decreased its workforce, reviewed life-of-mine plans and
processing options for optimization and flexibility, and deferred discretionary
spending. This effort continues in 1999 and Newmont expects to fund capital
expenditures and dividends from operating cash flow without incurring additional
debt, excluding project financing for the development of the Batu Hijau project.
16
<PAGE> 17
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 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.
During 1997 and 1998, Indonesia experienced a significant devaluation of its
currency, the rupiah, with significant recovery during the second quarter of
1999. With improved economic conditions and national parliamentary elections in
June 1999, the accompanying social and political unrest have substantially
subsided. While uncertainty surrounding the Indonesian situation continues,
Newmont's Minahasa operation and Batu Hijau project, located in remote areas,
remain largely unaffected. The functional currency for Newmont's Indonesian
projects is the U.S. dollar; however, certain receivables, primarily refunds of
Value Added Tax, are rupiah-denominated. During the nine months ended September
30, 1999 and 1998, $2.1 million and $2.0 million, respectively, was charged to
Costs applicable to sales to reflect the devaluation of these receivables.
RESULTS OF OPERATIONS
PRODUCTION
Production and per ounce cash costs are summarized below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------ ----------------------------
1999 1998 1999 1998
-------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
Equity production ozs. (000):
Nevada operations 597.4 675.3 1,789.6 2,138.1
Mesquite 42.0 38.5 123.6 118.8
La Herradura 10.0 6.6 25.6 6.6
Minera Yanacocha 217.5 192.7 578.2 495.0
Zarafshan-Newmont 77.8 41.8 199.6 134.5
Minahasa 98.3 49.5 235.0 181.8
------- ------- ------- -------
Total 1,043.0 1,004.4 2,951.6 3,074.8
======= ======= ======= =======
Total cash costs per equity ounce:
Nevada operations $ 218 $ 219 $ 214 $ 208
Mesquite 189 144 165 178
La Herradura 131 134 165 134
Minera Yanacocha 96 84 106 98
Zarafshan-Newmont 153 207 168 213
Minahasa 99 156 115 129
Weighted average $ 174 $ 186 $ 179 $ 184
</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.
NORTH AMERICAN 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 third quarter and first nine months of 1999 decreased 12%
and 16%, respectively, from the comparable 1998 periods with planned reduced
mining rates, lower-grade ores due to mine sequencing and processing oxide ores
with moderate refractory content that yield lower recovery. These factors also
contributed to increased total cash costs per ounce year-to-date.
In early 1999, Newmont and Barrick Gold Corporation agreed to exchange
approximately two million ounces of reserves and various land rights on the
north Carlin Trend. This exchange, which was finalized on May 3, 1999, created
operational and exploration synergies for both companies by consolidating their
respective land positions. Among other things, this exchange has accelerated
Newmont's access to the high-grade Deep Post deposit and will reduce development
costs. Nevada production in 1999 is expected to be somewhat less than the 2.8
million ounces in 1998 with total cash costs per ounce somewhat higher than the
$209 realized in 1998. Increased production in the fourth quarter of 1999 is
expected to be predominantly from the availability of Deep Post ore.
Production at the Mesquite mine, a heap-leach operation in southern
California, was 9% and 4% higher than in the prior year quarter and first nine
months, respectively. Total cash costs per ounce were $189 and $165 for the 1999
fourth quarter and year-to-
17
<PAGE> 18
date, respectively. Production in 1999 is expected to be somewhat higher than
the 154,000 ounces in 1998, with lower total cash costs per ounce than the $176
in 1998.
La Herradura, a 44%-owned joint venture in Mexico, commenced production in
mid-1998 and produced 25,600 equity ounces in the first nine months of 1999 at a
total cash cost of $165 per ounce.
OVERSEAS OPERATIONS
Production at Minera Yanacocha in Peru increased 13% to 423,700 ounces
(217,500 equity ounces) in the third quarter of 1999 and 17% to 1,126,100 ounces
(578,200 equity ounces) in the first nine months of 1999 from the comparable
1998 periods. Higher production reflected an increase in ore tons mined and more
than offset lower ore grades year-to-date. Total cash costs per ounce increased
to $96 and $106 for the quarter and nine-month periods, respectively. Estimated
gold production for 1999 is expected to reach 1,650,000 ounces (847,000 equity
ounces) with somewhat higher total cash costs per ounce than the $95 in 1998.
In the third quarter and first nine months of 1999, production from
Zarafshan-Newmont, a 50%-owned joint venture in the Central Asian Republic of
Uzbekistan, increased 86% and 48%, respectively, from the comparable 1998
periods. Increased production primarily resulted from improved recoveries of
gold from leach ore. Year-to-date 1999 total cash costs per ounce of $168 were
$45 below those in the same 1998 period with increased production. Also, 1998
total cash costs per ounce included an adjustment to reflect then anticipated
lower recovery rates. Production in 1999 is expected to exceed 250,000 equity
ounces with total cash costs significantly below the $207 per ounce in 1998.
In Indonesia, production from Newmont's 80%-owned Minahasa property was 98%
higher in the third quarter of 1999, compared with the same 1998 quarter and 29%
higher in the nine months ended September 30, 1999, with increased ore tons
mined in the third quarter and higher ore grades and recovery rates in both
periods. Total cash costs per ounce declined to $99 and $115 in the third
quarter and year-to-date 1999. Production is expected to exceed 300,000 ounces
in 1999 with total cash costs below the $127 per ounce in 1998.
FINANCIAL RESULTS
Consolidated sales include 100% of Minera Yanacocha production and Newmont
equity production elsewhere. For the three and six months ended September 30,
1999, sales included amortization of $12.2 million, primarily related to
non-cash premiums associated with put option contracts that expired during the
third quarter as described in Note (5). The decrease in consolidated sales
revenue in the 1999 periods from comparable 1998 periods resulted from the
decline in average realized gold prices received and lower production as shown
in the following table:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------- -----------------------
1999 1998 1999 1998
-------------- -------------- -------------- ---------
<S> <C> <C> <C> <C>
Consolidated sales (in millions) $ 340.2 $ 349.9 $ 983.1 $ 1,101.9
Consolidated production ozs. (000) 1,249.2 1,187.1 3,499.5 3,543.8
Average price realized per consolidated
ounce 271 $ 295 $ 281 $ 311
Average spot price received per ounce $ 265 $ 286 $ 276 $ 294
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 VS. 1998 1999 VS. 1998
----------------------- -----------------------
<S> <C> <C>
Decrease in consolidated sales due to
(in millions):
Consolidated production $ 21.8 $ (15.2)
Average gold price received (31.5) (103.6)
------ --------
Total $( 9.7) $ (118.8)
====== ========
</TABLE>
18
<PAGE> 19
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 was primarily attributable to lower
production in Nevada.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ -----------------------
1999 1998 1999 1998
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Costs applicable to sales
(in millions)
Nevada operations $ 131.8 $ 149.3 $ 386.6 $ 447.7
Mesquite 7.9 5.7 20.4 21.9
La Herradura 1.4 0.9 4.2 0.9
Minera Yanacocha 43.5 34.2 128.5 100.9
Zarafshan-Newmont 12.0 8.6 33.7 28.8
Minahasa 9.9 7.8 27.6 23.8
------- ------- ------- -------
Total $ 206.5 $ 206.5 $ 601.0 $ 624.0
======= ======= ======= =======
</TABLE>
Depreciation, depletion and amortization decreased 17% in the 1999 periods
compared with the 1998 periods primarily as a result of a December 1998
reduction in the carrying value of certain Nevada and Mesquite Property, plant
and mine development.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- -----------------------
1999 1998 1999 1998
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Depreciation, depletion and amortization
(in millions):
Nevada operations $ 30.8 $ 43.7 $ 91.5 $ 131.6
Mesquite 1.8 4.8 5.3 14.5
La Herradura 0.5 0.3 1.4 0.3
Minera Yanacocha 17.6 13.8 52.6 41.8
Zarafshan-Newmont 3.1 3.1 8.7 9.2
Minahasa 5.9 5.6 17.4 16.8
Other 1.0 1.6 3.7 2.3
------ ------ ------- -------
Total $ 60.7 $ 72.9 $ 180.6 $ 216.5
====== ====== ======= =======
</TABLE>
Exploration and research expenses decreased $4.6 million and $11.7 million
in the third quarter and first nine months of 1999, respectively, compared with
the same periods in 1998 as a result of cash conservation efforts during the low
gold price environment.
Interest, net of capitalized interest was $14.7 million for the third
quarter of 1999 compared with $19.4 million for the 1998 third quarter and $50.1
million for the nine months ended September 30, 1999 compared with $60.1 million
for the same 1998 period. The 1999 decrease reflected a reduction of long-term
debt and a higher proportion of capitalized interest associated with Newmont's
investment in Batu Hijau. Debt was reduced by approximately $135 million from
the proceeds of a prepaid forward sale contract as described in Note (4) to the
consolidated financial statements.
Dividends, interest and other income for the nine months ended September 30,
1999 included a $13 million gain on the sale of the True North, Alaska
exploration property and $8 million from the sale of an investment in another
mining company that occurred in the third quarter of 1999. For the period ended
September 30, 1998, $8 million was included for business interruption insurance
proceeds in Nevada.
Unrealized mark-to-market loss on call options of $51.3 million in the 1999
reported periods reflected the difference between the initial fair value of call
options contracts and the fair value at September 30, 1999. The fair value of
these contracts increased primarily as a result of the significant gold market
price increase that occurred during the last week of September 1999.
Income tax benefit in third quarter and nine-month period of 1999 primarily
related to non-cash charges for the unrealized mark-to-market loss and
amortization of put option premiums. In the same 1998 periods, the income tax
benefit primarily related to inclusion of benefits from the resolution of prior
year tax issues.
Equity loss of affiliate of $9.3 million and $4.9 million for the nine
months ended September 30, 1999 and 1998, respectively, related to start-up
costs at Batu Hijau that must be expensed pursuant to an accounting change
adopted in 1998. The cumulative effective of this accounting change of $32.9
million was included in the year-to-date 1998 results.
LIQUIDITY AND CAPITAL RESOURCES
During the first nine months of 1999, cash flow from operations of $205.2
million, proceeds from the prepaid forward sale of $137.2 million, proceeds from
asset sales of $40.1 million and a portion of cash balances provided funding for
capital expenditures ($159.6 million), net advances to joint ventures and
affiliates ($118.0 million), net debt repayments ($147.2 million) and dividends
($15.1 million). Newmont expects that operating cash flows for the 1999 year
will fund capital expenditures, advances to affiliates and
19
<PAGE> 20
dividends, assuming gold price realizations comparable to those year-to-date
1999.
INVESTING ACTIVITIES AND CAPITAL EXPENDITURES
Capital expenditures were as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
1999 1998
--------- ----------
<S> <C> <C>
Capital expenditures
(in millions):
North American operations $ 46.6 $ 92.8
Overseas operations 101.5 70.2
Other projects and capitalized
interest 11.5 12.3
------ -------
Total $159.6 $ 175.3
====== =======
</TABLE>
Expenditures for North American operations during the first nine months of
1999 related to activities in Nevada for capitalized mining costs ($21.8
million) and deferred mine development ($10.5 million). Overseas capital
expenditures were primarily for expansion projects at Minera Yanacocha ($90.2
million). Capital expenditures in the 1998 period were primarily for Nevada and
Minera Yanacocha leach pad expansion projects and Nevada capitalized mining.
Batu Hijau
Newmont has a 45% interest in the Batu Hijau project in Indonesia, accounted
for on an equity basis. At September 30, 1999 and December 31, 1998, Newmont's
investment was $387.0 million and $277.2 million, respectively. Funding of
$129.2 million in the first nine months of 1999 was included in Advances to
joint venture and affiliates. Project construction was complete in mid-October
1999 and operations start-up is in progress, with copper concentrate shipments
expected in early December 1999.
Batu Hijau contains proven and probable reserves of 10.6 billion pounds of
copper (4.8 billion equity pounds) and 11.8 million ounces of gold (5.3 million
equity ounces). The projected mine life is 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 be between $1.8 billion and
$1.9 billion.
Financing facilities for $1.0 billion are 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
will provide). Debt repayments will begin the earlier of six months after
project completion or June 15, 2001. At September 30, 1999, $920 million was
outstanding under this facility.
FINANCING ACTIVITIES
During the first nine months of 1999, Newmont reduced net borrowings under
its $1.0 billion revolving credit facility $104.0 million, with $281.0 million
outstanding at September 30, 1999, and reduced net borrowings for project
financings for Zarafshan-Newmont and Minera Yanacocha $25.3 million and repaid
$10 million of medium term notes.
In July 1999, long-term debt was reduced $135 million with initial proceeds
from a prepaid forward sale contract described in Note (4). The forward sale
includes delivery of approximately 483,333 ounces in June 2005, 2006 and 2007
and annual deliveries of 35,900 ounces beginning June 2000 through June 2007.
OTHER
On October 7, 1998, NMC acquired the 6.25% minority interest of NGC by
merging an NMC subsidiary into NGC and issuing 10.7 million shares of NMC common
stock to NGC minority interest stockholders.
Cash used for accounts payable and accrued expenses of $83.5 million for the
first half of 1998 primarily related to the payment of interest, severance and
other benefit-related accruals.
YEAR 2000 READINESS DISCLOSURE
Newmont has undertaken a comprehensive "Year 2000 Readiness Program"
("Program") to address the ability of its hardware, software and control systems
to correctly identify two-digit references to specific years, beginning with the
year 2000. The Program consists of five phases (assessment, analysis,
remediation, testing and certification) for four work streams (automated
processes,
20
<PAGE> 21
process control systems, personal computers and third-party suppliers). A third
party audit of the Program was completed in 1998 with favorable findings.
Each location has substantially completed all phases of each work stream in
all material respects. The estimated cost of the Program is expected to be
approximately $3 million, of which $1.9 million had been spent as of September
30, 1999. Remaining costs include implementing contingency plans and testing and
certification of new vendors, products and process control components. Newmont
does not separately track its internal costs incurred for the Program; however,
such costs are principally the related payroll costs for its information systems
group.
Although Newmont believes that the Program will adequately address year 2000
issues and prevent significant business disruptions, there can be no assurances
that compliance-related failures will not occur. Such 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 its operations. Newmont has contacted
all of its material third-party suppliers to assess their year 2000 readiness
and contingency plans have been developed and are continually reviewed and
refined to mitigate any such temporary delays. However, if such delays occur,
they are not reasonably likely to have a material adverse effect on Newmont's
financial condition 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, and are intended to be covered by the safe harbor created
thereby. Such forward-looking statements include, without limitation, (i)
estimates of future gold production for specific operations and on a
consolidated basis, (ii) estimates of future production costs, exploration
expenditures and other expenses for specific operations and on a consolidated
basis, (iii) estimates of future capital expenditures and other cash needs for
specific operations and on a consolidated basis and expectations as to the
funding thereof, (iv) statements as to the projected development of certain ore
deposits, including estimates of development and other capital costs, financing
plans with respect thereto and expected production commencement dates, (v)
estimates of future costs and other liabilities for certain environmental
matters and (vi) estimates of reserves.
Where Newmont expresses an expectation or belief as to future events or
results, such expectation or belief is expressed in good faith and believed to
have a reasonable basis. However, such forward-looking statements are subject to
risks, uncertainties and other factors, which could cause actual results to
differ materially from such forward-looking statements. Important factors that
could cause actual results to differ materially from future results expressed or
implied by such forward-looking statements ("cautionary statements") are
disclosed under "Risk Factors" in the Newmont Annual Report on Form 10-K for the
year ended December 31, 1998, 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.
All subsequent written and oral forward-looking statements attributable to
Newmont or to persons acting on its behalf are expressly qualified in their
entirety by the cautionary statements. Newmont disclaims any intent or
obligation to update publicly any forward-looking statements set forth in this
Report, whether as a result of new information, future events or otherwise.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The exhibits to this report are listed in the Exhibit Index on Page 23
hereof.
(b) Reports filed on Form 8-K during the quarter ended September 30,
1999
None
21
<PAGE> 22
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: November 12, 1999
/s/ BRUCE D. HANSEN
-----------------------------------
Bruce D. Hansen
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: November 12, 1999
/s/ LINDA K. WHEELER
-----------------------------------
Linda K. Wheeler
Vice President and Controller
(Principal Accounting Officer)
22
<PAGE> 23
Newmont Mining Corporation
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- ------------------------------------------------------
3 - By-Laws as amended through September 15, 1999 and
adopted September 15, 1999.
10(a)- Employment Agreement between registrant, Newmont Gold
Company and Bruce D. Hansen dated September 15, 1999.
10(b)- Agreement with Respect to Estate Tax Equalization between
Newmont Gold Company and John A.S. Dow as Executive and
Executive's Spouse dated August 20, 1999.
12 - Statement re Computation of Ratio of Earnings to Fixed
Charges.
27 - Financial Data Schedule.
23
<PAGE> 1
EXHIBIT 3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NEWMONT MINING CORPORATION
------------------
BY-LAWS
------------------
AS AMENDED THROUGH SEPTEMBER 15, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
NEWMONT MINING CORPORATION
------------------
BY-LAWS
------------------
ARTICLE I
STOCKHOLDERS
SECTION 1. Annual Meeting. An annual meeting of the stockholders of the
Corporation shall be held in each year at such place, and on such date and at
such time, as the Board of Directors of the Corporation shall designate in a
resolution duly adopted by it, for the purpose of electing Directors and
transacting such other business as may properly be brought before the meeting.
SECTION 2. Special Meetings. Special Meetings of the stockholders for any
lawful purposes may be called by the Board of Directors or by the Chairman of
the Board or by the President, and shall be called by the Chairman of the Board
or by the President or the Secretary upon a written request stating the purposes
thereof and signed by a majority of the Board of Directors. Each such meeting
shall be held at such place, and on such date and at such time, as the Board of
Directors of the Corporation shall designate in a resolution duly adopted by it,
for the purposes stated in the notices thereof. Business transacted at any
special meeting shall be limited to the purposes stated in the notices of the
meeting.
SECTION 3. Notices and Waivers. Written notices of every meeting of the
stockholders, stating the time, place and purposes thereof, shall be given
personally or by mail, not less than ten days nor more than sixty days before
the date on which the meeting is to be held, to each stockholder of record
entitled to vote at such meeting. If mailed, the notice shall be sent to the
stockholders at their respective addresses appearing on the stock records of the
Corporation or to such other addresses as they may have respectively designated
in writing, and shall be deemed given when mailed. A waiver of any notice,
signed by a stockholder before or after the time for the meeting, shall be
deemed equivalent to such notice.
<PAGE> 3
2
SECTION 4. Stockholder List. For every meeting of the stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of and the number of shares
registered in the name of each such stockholder, shall be made and be open to
the examination of any stockholder during ordinary business hours for at least
ten days prior to the meeting at the place where the meeting is to be held, and
shall be produced at the meeting and be subject at all times during the meeting
to the inspection of any stockholder present.
SECTION 5. Quorum. Subject to the provisions of any applicable law or of
the Corporation's Certificate of Incorporation in respect of the vote that shall
be required for a specified action, the holders of record of a majority of the
capital stock of the Corporation issued and outstanding and entitled to vote at
any meeting of its stockholders shall be required to be present in person or
represented by proxy at such meeting in order to constitute a quorum for the
transaction of any business.
SECTION 6. Adjournment. If at any meeting of the stockholders there is no
quorum, the meeting may be adjourned from time to time by a majority vote of the
stockholders present or represented, without any notice other than by
announcement at the meeting, until a quorum be obtained. Any meeting at which
there is a quorum may also be adjourned, in like manner, for such time or upon
such call as may be determined by vote. An adjourned meeting at which a quorum
is present or represented may transact any business which might have been
transacted at the meeting as first convened had there been a quorum.
SECTION 7. Chairman and Secretary. At every meeting of the stockholders
the presiding officer shall be the Chairman of the Board, or in his absence the
President, and in their absence a Vice President of the Corporation. The
Secretary or in his absence an Assistant Secretary of the Corporation shall act
as secretary of the meeting, or in their absence the presiding officer may
appoint any person present to act as secretary of the meeting.
SECTION 8. Voting. Except as otherwise specifically provided herein or in
the Restated Certificate of Incorporation of the Corporation with respect to the
ability of certain stockholders to cumulate votes in the election of directors,
each stockholder present in person or by proxy at a meeting of the stockholders
shall be entitled to one vote for each share of the capital stock of the
Corporation registered in the name of such stockholder on the books of the
Corporation and entitled to vote at such meeting. No proxy shall be voted on
after three years from its date unless it
<PAGE> 4
3
provides for a longer period. If the Board of Directors has not closed the stock
transfer books or fixed a record date for determination of stockholders entitled
to vote, no share of stock shall be voted on at any election of Directors which
has been transferred on the books of the Corporation within twenty days next
preceding such election. If the Board of Directors has closed the stock transfer
books or fixed a record date for determining the stockholders entitled to vote
at a meeting, only stockholders of record at the close of business on such
closing or record date shall be entitled to vote at such meeting and at any
adjournment thereof. All elections of Directors shall be by a plurality vote by
ballot. All other matters shall be decided by a majority vote viva voce of the
stockholders present in person or by proxy except as otherwise specifically
provided by any applicable law, the Corporation's certificate of Incorporation
or these By-Laws; provided, however, that the presiding officer shall have the
right to determine whether a stock vote with respect to any matter shall be
taken by ballot. On votes taken by ballot, each ballot shall state the name of
the stockholder or proxy voting and the number of shares voted.
SECTION 9. Inspectors of Elections. For all elections of Directors by the
stockholders and for any other matters upon which a stock vote by ballot is to
be taken, the Chairman of the meeting shall appoint two inspectors of election
unless the Board of Directors, which shall have power to do so, shall have
previously appointed two or more inspectors for the purpose and such inspectors
are present and serve as such at the meeting. Each inspector shall be sworn to
perform faithfully his duties as such, and the inspectors thereupon shall take
charge of the polls, receive and count the ballots and certify the result of the
vote taken. Questions as to the qualifications of the voters, validity of
proxies or ballots, or otherwise pertaining to the vote, shall be decided by the
inspectors subject to any ruling by the Chairman. No candidate for election as a
Director shall be appointed an inspector of such an election.
SECTION 10. Inspection of Books and Records. The Board of Directors shall
determine whether and to what extent, and at what times and places and under
what conditions and regulations, the books, accounts and records of the
Corporation (other than the stock ledger), or any of them, shall be open to the
inspection of any stockholder. No Stockholder shall have the right to inspect
any books, accounts, records or documents of the Corporation unless expressly so
authorized by the laws of the State of Delaware or by these By-Laws or by a
resolution of the Board of Directors. The stock ledger shall be the only
evidence as to the stockholders entitled to examine the stockholder list
referred to in Section 4 of Article I hereof, and the original or a duplicate
stock ledger containing the names and addresses
<PAGE> 5
4
of the stockholders and the number of shares held by them respectively shall be
open at all times during usual business hours at the Corporation's principal
office in the State of Delaware to the examination of any stockholder.
SECTION 11. Action by Written Consent. Any action which is required to be
or may be taken at any annual or special meeting of stockholders of the
Corporation may be taken without a meeting, without prior notice to stockholders
and without a vote if consents in writing, setting forth the action so taken,
shall have been signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or to take such
action at a meeting at which all shares entitled to vote thereon were present
and voted.
ARTICLE II
DIRECTORS
SECTION 1. Number, Term and Qualification. The number of Directors which
shall constitute the whole Board shall be not less than eight nor more than
fifteen. Within these specified limits, the number of Directors shall be
determined from time to time by the affirmative vote of a majority of the
Directors then in office. Directors elected at an annual meeting of the
stockholders or elected at any other time by the stockholders or by the Board of
Directors as hereinafter provided, shall hold office until the next annual
meeting of the stockholders and until their respective successors are elected
and qualified. Directors need not be stockholders.
SECTION 2. Resignations; Vacancies. Any Director may resign at any time
upon written notice to the Corporation. A resignation shall become effective
when and as specified in the notice, or, in the absence of such specification,
upon its acceptance by the Corporation. Vacancies occurring on the Board of
Directors for any reason, and newly created directorships resulting from any
increase in the number of Directors, may be filled by the affirmative vote of a
majority of the Directors then in office, though less than a quorum.
SECTION 3. Meetings and Notices. Meetings of the Board of Directors of
the Corporation, regular or special, may be held either within or without the
State of Delaware. Regular meetings of the Board may be held without notice at
such time and place as the Board from time to time may by resolution determine.
Special meetings of the Board, being all meetings other than its regular
meetings, may be called by the Chairman or the
<PAGE> 6
5
President, and shall be called by the Secretary upon the written request of any
two Directors. At least one day's prior written notice of the time, place and
purposes of every special meeting shall be given to each Director; provided,
however, that no notice of any such meeting need be given to any Director who
attends the meeting or signs before or after the meeting a written waiver of
notice thereof. Notices may be delivered personally or sent by mail or
telegraph, and shall be deemed given when so delivered or sent.
SECTION 4. Quorum. At all meetings of the Board of Directors six
Directors shall constitute a quorum for the transaction of business, and the
acts of a majority of the Directors present at any meeting at which a quorum is
present shall be the acts of the Board, except as may be otherwise specifically
provided by any applicable law or by the Corporation's Certificate of
Incorporation or by these By-Laws. If a quorum is not present at any meeting, a
majority of the Directors present may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum is
obtained.
SECTION 5. Order of Business. The order of business at meetings of the
Board of Directors shall be as the Board may determine from time to time, or,
subject to any such action by the Board, as determined by the Chairman of the
meeting.
SECTION 6. Powers. The Board of Directors shall manage and control the
business, property and affairs of the Corporation, and shall have and may
exercise all the powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Certificate of Incorporation or by these
By-Laws directed or required to be exercised or done by the stockholders.
SECTION 7. Compensation. The Directors may be paid as compensation for
their services a periodic fee, or a fixed fee for attendance at each meeting of
the Board of Directors, or both, and may be paid their expenses, if any, of
attendance at Board meetings, as the Board from time to time may determine, but
otherwise shall not be entitled to any fees or compensation for their services
as Directors. No such payment shall preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefor.
SECTION 8. Interests in Contract. No contract or other transaction
entered into by the Corporation shall be invalidated or affected by the fact
that any Director of the Corporation is a party thereto or is otherwise
interested therein, provided that such contract or transaction is authorized,
<PAGE> 7
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approved or ratified by the Board of Directors at a meeting at which there is a
quorum present without counting such interested Director and at which any such
interest of any Director is disclosed to the Board prior to its taking such
action, and that such action is taken by the affirmative vote of a majority of
the Directors present at such meeting without counting the vote or presence of
any such interested Director. No such interested Director shall be liable or
accountable to the Corporation or to any stockholder or creditor thereof or to
any other person for any loss incurred by the Corporation, or for any gains or
profits realized by such Director, under or by reason of any such contract or
transaction so authorized, approved or ratified by the Board.
ARTICLE III
EXECUTIVE COMMITTEE
SECTION 1. Appointment, Number and Quorum. The Board of Directors, by the
affirmative vote of a majority of the whole Board, may appoint an Executive
Committee consisting of such number of the directors not less than three as the
Board may determine; provided, always, that the Chief Executive Officer shall at
all times be appointed to the Committee. By similar action the Board may fill
any vacancy in, change the membership of, or dissolve the Committee at any time
in its discretion. At all meetings of the Committee a majority, but not less
than three, of its members shall constitute a quorum for the transaction of
business, and the affirmative vote of a majority of the whole Committee, but in
no case less than three members, shall be necessary to adopt any resolution or
to take any other action.
Any member of the Committee who ceases to be a Director shall cease ipso
facto to be a member of the Committee. Any member may resign at any time upon
written notice to the Corporation. A resignation shall become effective when and
as specified in the notice, or, in the absence of such specification, upon its
acceptance by the Corporation.
SECTION 2. Powers and Proceedings. The Executive Committee during the
intervals between the meetings of the Board of Directors, shall have and may
exercise, insofar as permitted by law, all the powers of the Board of Directors,
provided that the Committee shall not act to fill a vacancy on the Committee and
shall not take any action contrary to any specific action or direction of the
Board.
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The Board of Directors may designate the Chairman of the Committee and
prescribe rules governing its proceedings. The Committee may elect its own
Chairman from its members, if he has not been designated by the Board, and may
make its own rules of procedure insofar as they do not conflict with any rules
prescribed by the Board or with these By-Laws. Minutes of all acts and
proceedings of the Committee shall be kept in a proper record book and shall be
laid before the Directors at their next meeting.
SECTION 3. Compensation. The members of the Executive Committee may be
paid such compensation for their services, and such expenses incurred by them in
connection therewith, as the Board of Directors may determine, but otherwise
shall not be entitled to any compensation for their services as such Committee
members.
ARTICLE IV
OFFICERS
SECTION 1. Officers, Election, Term and Vacancies. At its first meeting
held after each annual meeting of the stockholders, the Board of Directors shall
elect, as the officers of the Corporation to serve until their successors are
elected and qualify, a Chairman of the Board, a President, one or more Vice
Presidents, (one or more of whom may be designated Executive Vice Presidents or
Senior Vice Presidents by the Board), a Secretary, a Treasurer, and a
Controller, and may elect or appoint such Assistant Secretaries, Assistant
Treasurers, Assistant Controllers and other officers as the Board in its
discretion may determine. If any such officers are not elected or appointed at
such first meeting, they may be elected or appointed at any subsequent meeting
of the Directors.
The Chairman of the Board and the President shall be Directors, but no
other officer need be a Director. Subject to the provisions of any applicable
law, one person may hold two or more offices.
Any officer may resign at any time upon written notice to the Corporation.
A resignation shall become effective when and as specified in the notice, or, in
the absence of such specification, upon its acceptance by the Corporation. Any
officer may be removed at any time, with or without cause, by the affirmative
vote of a majority of the whole Board of Directors. Any vacancy occurring in any
office for any reason may be filled by the Board of Directors.
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SECTION 2. Chairman of the Board. The Chairman of the Board shall preside
at meetings of the Directors and at meetings of the stockholders. He shall have
such other powers and duties as may be prescribed by the Board of Directors.
SECTION 3. Chief Executive Officer. The Chairman of the Board or the
President shall be designated by the Board of Directors to be the Chief
Executive Officer of the Corporation. Such designee shall have and be
responsible for the general management and control of all its business and
affairs, subject only to the Board of Directors and the Executive Committee.
Subject to the control of the Board of Directors, the Chief Executive
Officer shall have power to employ, appoint and discharge employees and agents
of the Corporation and fix their compensation, to make and sign contracts and
agreements in the name and on behalf of the Corporation, to sign certificates of
stock of the Corporation, to sign proxies for or to attend and vote at meetings
of stockholders of any other corporation in which the Corporation holds stock,
and to sign in the name and on behalf of the Corporation other instruments and
documents to be executed by it. He shall see that all books, records, reports,
statements and certificates are properly made, kept and filed as required of the
Corporation by any applicable law, and shall have such other powers and duties
as may be prescribed by the Board of Directors.
SECTION 4. President. The President shall be the chief operating officer
of the Corporation, and shall be responsible for the operation of its business
and affairs, subject to the direction of the Chairman of the Board and of the
Board of Directors and the Executive Committee.
SECTION 5. Vice Presidents. Each Vice President, Executive Vice President
(if any) and Senior Vice President (if any) shall have such powers and duties as
may be delegated to him by the Chief Executive Officer or as may be prescribed
by the Board of Directors.
SECTION 6. Secretary. The Secretary shall attend all meetings of the
stockholders, Board of Directors and Executive Committee, and shall record all
the proceedings and votes taken at such meetings in appropriate books kept by
him for that purpose. He shall give, or cause to be given, all notices required
by law or by these By-Laws to be given of all such meetings, and shall see that
the list of stockholders required for every meeting of the stockholders is
properly prepared and made and kept at the place of the meeting for at least ten
days prior thereto.
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The Secretary shall keep or cause to be kept in safe custody the seal of
the Corporation, its unissued stock certificates, stock transfer books, stock
ledgers, and such other books, records, documents and papers of the Corporation
as the Board of Directors may direct; provided, however, that the Transfer
Agent, if one be appointed, shall have custody of the unissued stock
certificates, stock transfer books and stock ledgers.
The Secretary shall have power to countersign or attest all contracts,
agreements, stock certificates, proxies and other instruments and documents
signed on behalf of the Corporation by the Chairman of the Board, the President
or a Vice President, and to affix thereto the seal of the Corporation, and to
certify all minutes and extracts from minutes of meetings of the stockholders,
Board of Directors and Executive Committee, and all resolutions passed or
adopted thereat.
He shall have such other powers and shall perform such other duties as may
be prescribed by the Board of Directors, and, subject to the control of the
Board, all such powers and duties as are generally incident to his office of
Secretary.
SECTION 7. Assistant Secretaries. Each Assistant Secretary shall have all
the powers and may perform all the duties of the Secretary in the absence or
disability of the Secretary unless the Board of Directors shall otherwise
determine, and shall have such other powers and perform such other duties as may
be prescribed by the Board of Directors.
SECTION 8. Treasurer. The Treasurer shall receive and have in his charge
or custody the funds, securities and valuable effects of the Corporation, and
shall deposit or keep same to the credit or in the name of the Corporation in
such banks or depositories as the Board of Directors designates. He shall
disburse the funds of the Corporation and dispose of its securities and valuable
effects in his charge only as he may be authorized or directed by the Board of
Directors or by an officer, committee or agent acting with and under the
authority of the Board. He shall take and preserve proper vouchers or receipts
for all disbursements.
The Treasurer shall keep full, accurate and current accounts of all
receipts and disbursements of funds, the acquisition and disposition of all
securities and valuable effects, and all other financial transactions of the
Corporation, in appropriate books kept by him for such purposes. He shall render
such reports, accounts and statements of the Corporation's financial
transactions and condition to the stockholders, Board of Directors, Executive
Committee and the Chief Executive Officer as may be required or requested, and
shall exhibit his books of account and records to the
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Chairman of the Board, the President, a Vice President, the Controller, or any
Director upon request at the Corporation's office where such books or records
are kept.
The Treasurer shall have power on behalf of the Corporation to endorse for
collection, bills, notes, drafts, checks and other instruments for payment of
funds to the Corporation, and to sign receipts and vouchers for payments made to
the Corporation. He shall sign or countersign all bills, notes, drafts, checks
and other instruments for payments made by the Corporation, and all assignments
or powers for transfers of securities and other valuable effects of the
Corporation, and certificates of the stock of the Corporation provided, however,
that the Board of Directors may authorize or require other officers or agents of
the Corporation to sign or countersign in its name any such papers, instruments
or documents.
He shall have such other powers and shall perform such other duties as may
be prescribed by the Board of Directors, and, subject to the control of the
Board, such powers and duties as are generally incident to his office of
Treasurer.
If required by the Board of Directors, the Treasurer shall give a bond or
bonds in such sums and with such sureties as the Board may approve, for the
faithful performance of his duties and for the restoration to the Corporation,
in case of his death, resignation, retirement or removal from office, of all
books, records, papers, money and property of whatever kind in his possession or
under his control and belonging to the Corporation.
SECTION 9. Assistant Treasurers. Each Assistant Treasurer shall have all
the powers and may perform all the duties of the Treasurer in case of the
disability of the Treasurer unless the Board of Directors shall otherwise
determine, and shall have such other powers and perform such other duties as may
be prescribed by the Board of Directors. He shall give a like bond or bonds, if
any, as are given by the Treasurer.
SECTION 10. Controller. The Controller shall have direct responsibility
for and supervision of the accounting records of the Corporation and of its
subsidiaries and managed affiliated corporations, and shall see that adequate
examination and audits thereof are currently and regularly made. He shall
prepare and file all tax returns, and shall prepare statements of operating and
production costs, cash forecasts and any other financial reports of the
Corporation. He shall ascertain that the property of the Corporation is kept at
all times properly and adequately insured, and shall have custody of any bonds
given by the Treasurer or any Assistant Treasurer as above mentioned. He shall
have such other powers and
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perform such other duties as may be prescribed by the Board of Directors or be
assigned to him by the Chairman of the Board.
SECTION 11. Assistant Controllers. Each Assistant Controller shall have
all the powers and may perform all of the duties of the Controller in case of
the disability of the Controller unless the Board of Directors shall otherwise
determine, and shall have such other powers and perform such other duties as may
be prescribed by the Board of Directors.
SECTION 12. Other Officers. Each other officer elected or appointed by
the Board of Directors shall have such powers and perform such duties as may be
prescribed by the Board, and, subject to the control of the Board, such powers
and duties as are generally incident to his office.
ARTICLE V
CAPITAL STOCK
SECTION 1. Stock Certificates. Certificates for shares of the capital
stock of the Corporation shall be in such form, not inconsistent with any
applicable law or the Corporation's Certificate of Incorporation, as shall be
prescribed or approved from time to time by the Board of Directors. Holders of
the stock shall be entitled to have such certificates issued in the name of the
Corporation, under its seal and signed by the Chairman of the Board, the
President or a Vice President and by the Secretary or Treasurer or an Assistant
Secretary or Assistant Treasurer, evidencing and certifying the number of shares
owned by such respective stockholders in the Corporation.
Such certificates may be so sealed and signed either manually or by
facsimile seal or signatures, if and as permitted by law and authorized or
approved by the Board of Directors. If any officer whose signature is used on
any certificate shall cease to be such officer for any reason before the
issuance or delivery of the certificate by the Corporation, the validity of the
Certificate upon its issuance and delivery shall not be thereby affected.
The Board of Directors may authorize and require the signing of any
certificate or certificates by a Transfer Agent and a Registrar, in addition to
the signing by the officers of the Corporation.
SECTION 2. Stock Transfers. The shares of stock of the Corporation shall
be transferred only on the books of the Corporation by the holders thereof in
person or by their duly authorized attorney, upon surrender for cancellation of
the certificates for the shares to be transferred, with a duly
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executed assignment or stock power endorsed thereon or attached thereto, and
accompanied by such other evidences of transfer or authority, such guarantees of
signatures and such payments of stock transfer taxes or other charges as may be
reasonably required.
The Board of Directors may appoint a Transfer Agent and a Registrar for the
capital stock of the Corporation.
SECTION 3. Lost Certificates. Unless otherwise determined by the Board of
Directors, a new certificate shall be issued in place of any certificate
theretofore issued by the Corporation for its capital stock and alleged by the
holder thereof to have been lost, stolen or destroyed; provided, however, that
the applicant for any such new certificate shall furnish to the Corporation
evidence satisfactory to it of the alleged loss, theft or destruction, together
with such bond or indemnification as the Board of Directors from time to time
may require to indemnify the Corporation against any claim that may be made
against it or its officers or agents on account of a certificate alleged to have
been lost, stolen or destroyed or the issuance of a new certificate replacing
it.
SECTION 4. Closing Transfer Books or Fixing Record Date. The Board of
Directors may close the stock transfer books of the Corporation for a period not
exceeding sixty days preceding the date of any meeting of stockholders or the
date for payment of any dividend or the date for the allotment of rights or the
date when any change or conversion or exchange of capital stock shall go into
effect, or for a period of not exceeding sixty days in connection with obtaining
the consent of stockholders for any purpose. In lieu of closing the stock
transfer books as aforesaid, the Board of Directors may fix in advance a date,
not exceeding sixty days preceding the date of any meeting of stockholders or
the date for the payment of any dividend or the date for the allotment of rights
or the date when any change or conversion or exchange of capital stock shall go
into effect, or may fix a date in connection with obtaining any consent of
stockholders, as a record date for the determination of the stockholders
entitled to notice of and to vote at any such meeting and any adjournment
thereof, or to receive payment of any such dividend, or to any such allotment of
rights, or to exercise the rights in respect of any such change, conversion or
exchange of capital stock, or to give such consent. Only such stockholders as
shall be stockholders of record at the close of business on the date of such
closing of the stock transfer books or on such record date shall be entitled to
notice of and to vote at such meeting and any adjournment thereof, or to receive
payment of such dividend, or to receive such allotment of rights, or to exercise
such rights, or to give such consent, as the case may be, notwith-
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standing any transfer of any stock on the books of the Corporation after any
such closing or record date.
SECTION 5. Registered Stockholders. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of the State of
Delaware.
SECTION 6. Stock Ledger. The original or a duplicate stock ledger shall
be kept at the Corporation's principal office in the State of Delaware.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
SECTION 1. Indemnification of Directors and Officers. The Corporation
shall, to the fullest extent permitted by applicable law, indemnify any person
(and the heirs, executors and administrators thereof) who was or is made, or
threatened to be made, a party to an action, suit or proceeding, (whether civil,
criminal, administrative or investigative, whether involving any actual or
alleged breach of duty, neglect or error, any accountability, or any actual or
alleged misstatement, misleading statement or other act or omission and whether
brought or threatened in any court or administrative or legislative body or
agency,) including (i) an action by or in the right of the Corporation to
procure a judgment in its favor and (ii) an action by or in the right of any
other corporation of any type or kind, domestic or foreign, or any partnership,
joint venture, trust, employee benefit plan or other enterprise, which any
director or officer of the Corporation is serving or served in any capacity at
the request of the Corporation, by reason of the fact that he, his testator or
intestate is or was a director or officer of the Corporation, or is serving or
served such other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise in any capacity, against judgments, fines,
amounts paid in settlement, and costs, charges and expenses, including
attorneys' fees, incurred therein or in any appeal thereof.
SECTION 2. Indemnification of Others. The Corporation shall indemnify
other persons and reimburse the expenses thereof, to the extent required by
applicable law, and may indemnify any other person to whom the Corporation is
permitted to provide indemnification or the advancement
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of expenses, whether pursuant to rights granted pursuant to, or provided by, the
Delaware General Corporation Law or otherwise.
SECTION 3. Advances or Reimbursement of Expenses. The Corporation shall,
from time to time, reimburse or advance to any person referred to in Section 1
the funds necessary for payment of expenses, including attorneys' fees, incurred
in connection with any action, suit or proceeding referred to in Section 1, upon
receipt of a written undertaking by or on behalf of such person to repay such
amount(s) if a judgment or other final adjudication adverse to the director or
officer establishes that (i) his acts were committed in bad faith or were the
result of active and deliberate dishonesty and, in either case, were material to
the cause of action so adjudicated, (ii) he personally gained in fact a
financial profit or other advantage to which he was not legally entitled, or
(iii) his conduct was otherwise of a character such that Delaware law would
require that such amount(s) be repaid.
SECTION 4. Service of Certain Entities Deemed Requested. Any director or
officer of the Corporation serving (i) another corporation, of which a majority
of the shares entitled to vote in the election of its directors is held by the
Corporation, or (ii) any employee benefit plan of the Corporation or any
corporation referred in clause (i), in any capacity shall be deemed to be doing
so at the request of the Corporation.
SECTION 5. Interpretation. Any person entitled to be indemnified or to
the reimbursement or advancement of expenses as a matter of right pursuant to
this Article may elect to have the right to indemnification (or advancement of
expenses) interpreted on the basis of the applicable law in effect at the time
of the occurrence of the event or events giving rise to the action, suit or
proceeding, to the extent permitted by applicable law, or on the basis of the
applicable law in effect at the time indemnification is sought.
SECTION 6. Indemnification Right. The right to be indemnified or to the
reimbursement or advancement of expenses pursuant to this Article (i) is a
contract right pursuant to which the person entitled thereto may bring suit as
if the provisions hereof were set forth in a separate written contract between
the Corporation and the director or officer, (ii) is intended to be retroactive
and shall be available with respect to events occurring prior to the adoption
hereof, and (iii) shall continue to exist after the rescission or restrictive
modification hereof with respect to events occurring prior thereto.
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SECTION 7. Indemnification Claims. If a request to be indemnified or for
the reimbursement or advancement of expenses pursuant hereto is not paid in full
by the Corporation within thirty days after a written claim has been received by
the Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled also to be paid the expenses of
prosecuting such claim. Neither the failure of the Corporation (including its
Board of Directors, independent legal counsel, or its stockholders) to have made
a determination prior to the commencement of such action that indemnification of
or reimbursement or advancement of expenses to the claimant is proper in the
circumstances, nor an actual determination by the Corporation (including its
Board of Directors, independent legal counsel, or its stockholders) that the
claimant is not entitled to indemnification or to the reimbursement or
advancement of expenses, shall be a defense to the action or create a
presumption that the claimant is not so entitled.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 1. Fiscal Year. The fiscal year of the Corporation shall be the
calendar year.
SECTION 2. Offices. The principal office of the Corporation in the State
of Delaware shall be maintained in the City of Wilmington, County of New Castle.
The Corporation may have offices at such other places within or without the
State of Delaware as the Board of Directors from time to time may determine.
SECTION 3. Resident Agent. The Resident Agent of the Corporation in
charge of its principal office in the State of Delaware shall be The Corporation
Trust Company.
SECTION 4. Seal. The seal of the Corporation shall have inscribed thereon
the name of the Corporation, the year of its incorporation and the words
"Corporate Seal, Delaware."
SECTION 5. Dividends. Subject to all applicable laws and the Certificate
of Incorporation, dividends upon the capital stock of the Corporation may be
declared by the Board of Directors, payable in cash, in property or in shares of
the capital stock of the Corporation.
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SECTION 6. Amendments. Subject to any By-Laws made by the stockholders,
the Board of Directors may make By-Laws, and from time to time may alter, amend
or repeal any By-Law or By-Laws; but any By-Laws made by the Board of Directors
may be altered or repealed by the stockholders at any annual meeting, or at any
special meeting provided notice of such proposed alteration or repeal be
included in the notice of such special meeting.
SECTION 7. Separability. In case any By-Law or provision in any By-Law
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining By-Laws or remaining provisions of such By-Law
shall not in any way be affected or impaired thereby.
<PAGE> 1
EXHIBIT 10(a)
EMPLOYMENT AGREEMENT
AGREEMENT by and between Newmont Mining Corporation, a Delaware
corporation (the "Company"), and Newmont Gold Company, a Delaware corporation
("Newmont Gold"), and Bruce D. Hansen (the "Executive"), dated as of the 15th
day of September, 1999.
The Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS. (a) The "Effective Date" shall mean the first
date during the Change of Control Period (as defined in Section 1(b)) on which a
Change of Control (as defined in Section 2) occurs. Anything in this Agreement
to the contrary notwithstanding, if a Change of Control occurs and if the
Executive's employment with the Company is terminated prior to the date on which
the Change of Control occurs, and if it is reasonably demonstrated by the
Executive that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or anticipation of a Change of Control,
then for all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period commencing on
the 1st day of February, 1999 and ending on the third anniversary of such date;
provided, however, that commencing on the date one year after such date, and on
each annual anniversary of such date (such date and each annual anniversary
thereof shall be hereinafter referred to as the "Renewal Date"), unless
previously terminated, the Change of Control Period shall be automatically
extended so as to terminate three years from such Renewal Date, unless at least
60 days prior to the Renewal Date the Company shall give notice to the Executive
that the Change of Control Period shall not be so extended.
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2. CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of
Control" shall mean:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (iv)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the Company or
the acquisition of assets of another corporation (a "Business Combination"), in
each case, unless, following such Business Combination, (i) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent
2
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that such ownership existed prior to the Business Combination and (iii) at least
a majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the third anniversary of
such date (the "Employment Period").
4. TERMS OF EMPLOYMENT. (a) Position and Duties. (i) During the
Employment Period, (A) the Executive's position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall
be at least commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 120-day period
immediately preceding the Effective Date and (B) the Executive's services shall
be performed at the location where the Executive was employed immediately
preceding the Effective Date or any office or location less than 35 miles from
such location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary"), which
shall be paid at a monthly rate, at least equal to twelve times the highest
monthly base salary paid or payable, including any base salary which has been
earned but deferred, to the Executive by the Company and its affiliated
companies in respect of the twelve-month period immediately preceding the month
in which the Effective Date occurs. During the Employment Period, the Annual
Base Salary shall be reviewed no more than 12 months after the last salary
increase awarded to the Executive prior to the Effective Date and thereafter at
least annually. Any increase in Annual Base Salary shall not serve to limit or
reduce any other obligation to the Executive under this Agreement.
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Annual Base Salary shall not be reduced after any such increase and the term
Annual Base Salary as utilized in this Agreement shall refer to Annual Base
Salary as so increased. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or under common
control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (the "Annual Bonus") in cash at least equal to the Executive's
aggregate highest bonus under the Company's Annual Incentive Compensation Plan
and Intermediate Term Incentive Compensation Plan, or any successor or
replacement plans, for the last three full fiscal years prior to the Effective
Date (annualized in the event that the Executive was not employed by the Company
for the whole of such fiscal year) (the "Recent Annual Bonus"). Each such Annual
Bonus shall be paid no later than the end of the third month of the fiscal year
next following the fiscal year for which the Annual Bonus is awarded, unless the
Executive shall elect to defer the receipt of such Annual Bonus.
(iii) Incentive, Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable generally to
other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in each
case, less favorable, in the aggregate, than the most favorable of those
provided by the Company and its affiliated companies for the Executive under
such plans, practices, policies and programs as in effect at any time during the
120-day period immediately preceding the Effective Date or if more favorable to
the Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies.
(iv) Welfare Benefit Plans. During the Employment Period, the Executive
and/or the Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies, but in no event shall
such plans, practices, policies and programs provide the Executive with benefits
which are less favorable, in the aggregate, than the most favorable of such
plans, practices, policies and programs in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies.
(v) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately
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preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the Executive shall
be entitled to fringe benefits, including, without limitation, tax and financial
planning services, payment of club dues, and, if applicable, use of an
automobile and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company and its affiliated companies at any time during
the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and its affiliated companies as in effect
for the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
5. TERMINATION OF EMPLOYMENT. (a) Death or Disability. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 12(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative.
(b) Cause. The Company may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement, "Cause" shall
mean:
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(i) the willful and continued failure of the Executive to perform
substantially the Executive's duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of the Company which
specifically identifies the manner in which the Board or Chief Executive Officer
believes that the Executive has not substantially performed the Executive's
duties, or
(ii) the willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on the part
of the Executive, shall be considered "willful" unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in subparagraph (i) or (ii) above, and
specifying the particulars thereof in detail.
(c) Good Reason. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the provisions of
Section 4(b) of this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any office
or location other than as provided in Section 4(a)(i)(B) hereof or the Company's
requiring the Executive to travel on Company business to a substantially greater
extent than required immediately prior to the Effective Date;
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(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section 11(c)
of this Agreement.
For purposes of this Section 5(c), any good faith
determination of "Good Reason" made by the Executive shall be conclusive.
Anything in this Agreement to the contrary notwithstanding, a termination by the
Executive for any reason during the 30-day period immediately following the
first anniversary of the Effective Date shall be deemed to be a termination for
Good Reason for all purposes of this Agreement.
(d) Notice of Termination. Any termination by the Company for Cause, or
by the Executive for Good Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 12(b) of this
Agreement. For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) Good Reason; Other
Than for Cause, Death or Disability. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash within
30 days after the Date of Termination the aggregate of the following amounts:
A. the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore
paid, (2) the product
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of (x) the higher of (I) the Recent Annual Bonus and (II) the
Annual Bonus paid or payable, including any bonus or portion
thereof which has been earned but deferred (and annualized for
any fiscal year consisting of less than twelve full months or
during which the Executive was employed for less than twelve
full months), for the most recently completed fiscal year
during the Employment Period, if any (such higher amount being
referred to as the "Highest Annual Bonus") and (y) a fraction,
the numerator of which is the number of days in the current
fiscal year through the Date of Termination, and the
denominator of which is 365 and (3) any compensation
previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation
pay, in each case to the extent not theretofore paid (the sum
of the amounts described in clauses (1), (2), and (3) shall be
hereinafter referred to as the "Accrued Obligations");
B. the amount equal to the product of (1) three and
(2) the sum of (x) the Executive's Annual Base Salary and (y)
the Highest Annual Bonus; and
C. an amount (calculated consistent with the example
set forth on Exhibit A to this Agreement) equal to the excess
(without present value discount, as a result of receiving such
amount prior to the end of the 3-year period following the
Date of Termination) of (a) the actuarial equivalent of the
benefit under the qualified defined benefit retirement plan of
the Company or any Affiliate in which the Executive
participates immediately prior to the Effective Date, or under
any such plan with more favorable benefits in which the
Executive participates following the Effective Date (the
"Retirement Plan"), and any excess or supplemental retirement
plan, program or arrangement of the Company or any Affiliate
in which the Executive participates immediately prior to the
Effective Date or under any such plans, programs or
arrangements with more favorable benefits in which the
Executive participates following the Effective Date (together,
the "SERP") which the Executive would receive if the
Executive's employment continued for three years after the
Date of Termination, assuming for this purpose that (i) the
Executive is fully vested in all benefits to be calculated
under this clause (a), (ii) the Executive is treated as having
attained three additional years of age under the Retirement
Plan or the SERP, including for purposes of reducing any
otherwise applicable actuarial reduction, but not for purposes
of reducing the number of years of the Executive's life
expectancy, and (iii) the Executive's compensation in each of
the three years, for purposes of calculating the benefits
under this clause (a), pursuant to the benefit formulas for
the Retirement Plan and SERP is that required by Section
4(b)(i) and Section 4(b)(ii), over (b) the actuarial
equivalent of the Executive's actual benefit (paid or
payable), if any, under the Retirement Plan and the SERP as of
the Date of Termination. The actuarial assumptions used for
determining actuarial equivalence in this
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Section 6(a)(i)(C) shall be no less favorable to the Executive
than the most favorable in effect under the Retirement Plan
and SERP, as the case may be, immediately prior to the
Effective Date or on the Date of Termination;
(ii) for three years after the Executive's Date of Termination, or such
longer period as may be provided by the terms of the appropriate plan, program,
practice or policy, the Company shall continue benefits to the Executive and/or
the Executive's family at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and policies described in
Section 4(b)(iv) of this Agreement if the Executive's employment had not been
terminated or, if more favorable to the Executive, as in effect generally at any
time thereafter with respect to other peer executives of the Company and its
affiliated companies and their families, provided, however, that if the
Executive becomes reemployed with another employer and is eligible to receive
medical or other welfare benefits under another employer provided plan, the
medical and other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of eligibility. For
purposes of determining eligibility (but not the time of commencement of
benefits) of the Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be considered to have
remained employed until three years after the Date of Termination and to have
retired on the last day of such period;
(iii) the Company shall, at its sole expense as incurred, provide the
Executive with outplacement services the scope and provider of which shall be
consistent with the Company's practices during the one-year period immediately
preceding the Effective Date; and
(iv) to the extent not theretofore paid or provided, the Company shall
timely pay or provide (or cause to be paid or provided) to the Executive any
other amounts or benefits required to be paid or provided or which the Executive
is eligible to receive under any plan, program, policy or practice or contract
or agreement of the Company and its affiliated companies (such other amounts and
benefits shall be hereinafter referred to as the "Other Benefits").
(b) Death. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive's legal representatives under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 6(b) shall
include, without limitation, and the Executive's estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive's estate and/or the
Executive's beneficiaries, as in effect on the date of the Executive's death
with respect to other peer executives of the Company and its affiliated
companies and their beneficiaries.
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(c) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 6(c) shall
include, and the Executive shall be entitled after the Disability Effective Date
to receive, disability and other benefits at least equal to the most favorable
of those generally provided by the Company and its affiliated companies to
disabled executives and/or their families in accordance with such plans,
programs, practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive and/or the Executive's family, as in effect at any
time thereafter generally with respect to other peer executives of the Company
and its affiliated companies and their families.
(d) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive (x) his Annual Base Salary through the Date of
Termination, (y) the amount of any compensation previously deferred by the
Executive, and (z) Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment during the Employment
Period, excluding a termination for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for Accrued Obligations
and the timely payment or provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor, subject to Section
12(f), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of
its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
8. FULL SETTLEMENT. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company,
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the Executive or others of the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case interest on any delayed
payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of
the Internal Revenue Code of 1986, as amended (the "Code").
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any payment
or distribution by the Company or its affiliates to or for the benefit of the
Executive (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 9) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. Notwithstanding the foregoing provisions of this Section 9(a), if it
shall be determined that the Executive is entitled to a Gross-Up Payment, but
that the Payments do not exceed 110% of the greatest amount (the "Safe Harbor
Amount") that could be paid to the Executive such that the receipt of Payments
would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to
the Executive and the amounts payable under this Agreement shall be reduced so
that the Payments, in the aggregate, are reduced to the Safe Harbor Amount. The
reduction of the amounts payable hereunder, if applicable, shall be made by
first reducing the payments under Section 6(a)(i)(B), unless an alternative
method of reduction is elected by the Executive. For purposes of reducing the
Payments to the Safe Harbor Amount, only amounts payable under this Agreement
(and no other Payments) shall be reduced. If the reduction of the amount payable
under this Agreement would not result in a reduction of the Payments to the Safe
Harbor Amount, no amounts payable under the Agreement shall be reduced pursuant
to this Section 9(a).
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by a nationally
recognized certified public accounting firm designated by the Executive (the
"Accounting Firm") which shall provide detailed supporting calculations both to
the Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change
of Control, the Executive shall appoint another nationally recognized accounting
firm to make the determinations required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment,
as determined pursuant to this
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Section 9, shall be paid by the Company to the Executive within five days of the
receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 9(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively to
contest such claim, and
(iv) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 9(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before
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any administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however, that
if the Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 9(c), the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 9(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
10. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 10 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
11. SUCCESSORS. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
13
<PAGE> 14
(c) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.
12. MISCELLANEOUS. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
At the last address on the Company's records
If to the Company:
Newmont Mining Corporation
1700 Lincoln Street
Denver, CO 80203
Attention: Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
14
<PAGE> 15
(f) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is "at will"
and, subject to Section 1(a) hereof, prior to the Effective Date, the
Executive's employment may be terminated by either the Executive or the Company
at any time prior to the Effective Date, in which case the Executive shall have
no further rights under this Agreement. From and after the Effective Date, this
Agreement shall supersede any other employment agreement between the parties
with respect to the subject matter hereof. The Executive shall have no rights to
severance benefits under any severance plan or policy of the Company in
connection with any termination of employment during the Employment Period.
(g) For purposes of this Agreement, employment of the Executive with
Newmont Gold shall be treated as employment with the Company.
(h) Newmont Gold shall be jointly and severally liable with the Company
for any liabilities to the Executive under this Agreement.
15
<PAGE> 16
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company and
Newmont Gold have caused these presents to be executed in its name on its
behalf, all as of the day and year first above written
/s/ Bruce D. Hansen
---------------------------------
Bruce D. Hansen
NEWMONT MINING CORPORATION
By: /s/ Timothy J. Schmitt
-----------------------------
Timothy J. Schmitt
Vice President and Secretary
NEWMONT GOLD COMPANY
By: /s/ Timothy J. Schmitt
-----------------------------
Timothy J. Schmitt
Vice President and Secretary
16
<PAGE> 17
EXHIBIT A
NEWMONT MINING CORPORATION
EMPLOYMENT AGREEMENT
<TABLE>
<CAPTION>
"Enhanced" "Actual"
Pension Pension
Benefit Benefit
----------- ----------
<S> <C> <C>
1. Final average earnings
(pensionable earnings) $ 720,000 $ 720,000(1)
2. Times 1.75% x .0175 x .0175
----------- ----------
12,600 12,600
3. Social Security offset(2) -0- -0-
4. Net benefit unit 12,600 12,600
5. Times years of
credited service x 16 x 13(3)
----------- ----------
201,600 163,800
6. Early commencement
of pension adjustment(4)
Age 58 55
Factor x 84% x 72%
----------- ----------
7. Early commencement
benefit 169,344 117,936
8. Times life expectancy x 25.658 yrs. x 25.658 yrs.
----------- ----------
9. Lump sum benefit $ 4,345,028 $3,026,002
=========== ==========
10. Benefit payable pursuant
to Section 6(a)(i)(C): $ 4,345,028
(3,026,002)
-----------
$ 1,319,026
===========
</TABLE>
- ----------------------
(1) Assumes a separation benefit pursuant to Section 6(a)(i)(B) of
$1,350,000. Such amount is includible pursuant to Section 1.25(b)(i) of
Newmont Gold Company's Pension Plan. Divide by "5" for impact on final
average earnings.
(2) Ignored for purposes of this example.
(3) Includes three additional years of deemed service pursuant to Section
1.26(d) of Newmont Gold Company's Pension Plan.
(4) For purposes of this example only, Section 3.7 of Newmont Gold
Company's Pension Plan is ignored.
<PAGE> 1
EXHIBIT 10(b)
AGREEMENT WITH RESPECT TO
ESTATE TAX EQUALIZATION
This Agreement With Respect to Estate Tax Equalization ("Agreement") is
made by and between Newmont Gold Company, a Delaware corporation (referred to as
"Newmont"), and John Dow, an executive of Newmont (referred to as "Executive"),
and Executive's spouse (referred to as "Spouse").
RECITALS.
A. Executive is a salaried executive employee of Newmont.
B. Neither Executive nor Spouse are United States citizens.
C. Newmont has requested that Executive and Spouse obtain a United
States Alien Registration Receipt Card (referred to as a "Green Card").
D. Executive has advised Newmont that obtaining a Green Card (and
possibly mere application for a Green Card) could result in characterization of
the Executive and his wife as "residents" for purposes of United States Estate
Taxes, and consequently, could result in the imposition of United States Estate
Taxes on the Executive and Spouse's worldwide assets.
E. Executive and Newmont have agreed that the imposition of such United
States Estate Taxes may in many cases be worse than the taxation for other
Newmont executive employees who are United States citizens and that such adverse
tax consequence could occur on the death of either Executive or Spouse.
F. Newmont desires that its executive employees (and, consequently,
their spouses) who are not United States citizens obtain sufficient immigration
law status in the United States to ensure their uninterrupted ability to reside
in and conduct business in the United States; however, Newmont does not wish
this desire to create a disparity in treatment between United States citizen
executive employees and non-United States citizen executive employees.
G. Therefore, Newmont has agreed to make payments to the Executive, as
set forth in this Agreement, computed in amounts intended to be utilized by the
Executive and Spouse to eliminate the disparate treatment.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Executive, Spouse and Newmont agree as follows:
<PAGE> 2
1. Tax Equalization Payment. Newmont agrees to pay Executive during the
term of this Agreement (as defined in Section 4 hereof) at least annually, on or
before December 1 of each year (or in the case of the first payment after
execution of this Agreement within 60 days thereafter) (referred to as the
"Payment Date"), an amount (referred to as the "Tax Equalization Payment") equal
to the sum of the following:
(a) the annual premium for such calendar year for guaranteed
renewable term life insurance with at least a ten year level premium structure
and insuring the life of Executive in the amount of $5,000,000 in death benefits
(referred to as the "Executive Premium");
(b) the annual premium for such calendar year for guaranteed
renewable term life insurance with at least a ten-year level premium structure
and insuring the life of Spouse in an amount of $1,000,000 in death benefits
(referred to as the "Spousal Premium"); and
(c) the additional income taxes for the calendar year which
includes the Payment Date estimated to be imposed by the United States federal
government, state governments, local governments and other non-United States
jurisdictions and payable by Executive or Spouse with respect to payment by
Newmont of the Tax Equalization Payment (referred to as the "Tax Gross-Up
Amount").
2. Determination of Executive Premium, Spousal Premium and Tax Gross-Up
Amount.
(a) Payment Notice. On or before the 60th day before the
Payment Date (or in the case of the first payment after execution of this
Agreement, within 45 days after such execution), the Executive shall deliver to
Newmont at the address listed in Section 16 of this Agreement a notice setting
forth the amounts of the Executive Premium, Spousal Premium and estimated Tax
Gross-Up Amount for the calendar year in which the Payment Date is included.
(b) Disagreement Notice. Newmont must send to the Executive on
or before 30 days before the Payment Date a notice (or in the case of the first
payment after the execution of this Agreement, within 50 days after such
execution) ("Disagreement Notice") setting forth specific disagreement with any
such amount of the Executive Premium, Spousal Premium or estimated Tax Gross-Up
Amount and the specific reasons for the disagreement; otherwise, Newmont must
pay the full amount of the Tax Equalization Payment shown on the Payment Notice
by the Payment Date or be in default under this Agreement.
(c) Process For Resolving Disagreement. If Newmont delivers a
Disagreement Notice, and Newmont and the Executive fail to resolve their
disagreement and
2
<PAGE> 3
agree in writing on an amount of the Tax Equalization Payment before the Payment
Date, Newmont must nonetheless make full payment of the Tax Equalization Payment
set forth on the Payment Notice on the Payment Date. Thereafter, Newmont may
pursue its disagreement in accordance with the rules of arbitration under the
American Arbitration Association, but until resolution, this Agreement shall
remain in full force and effect with respect to future payments; provided,
however, that the Executive shall remain liable to Newmont (without interest)
for any overpayments finally determined by such arbitration.
3. Periodic Adjustment of Insurance Amounts.
(a) Acknowledgment of Adjustment. Because the Tax Equalization
Payment is intended to provide funds to maintain life insurance in amounts
sufficient to eliminate any disparities in United States Estate Taxes between
Executive and Spouse and other citizen executive employees, Newmont agrees to a
periodic review and, if requested (as set forth below), an increase in the
amount of the Tax Equalization Payment based upon the financial condition of
Executive and Spouse, subject to the limitation set forth in paragraph (c) below
of this Section 3.
(b) Procedure for Adjustment. At any time during the term of
this Agreement, as part of the Payment Notice, the Executive may request higher
payments to reflect premiums for insurance coverage in amounts greater than
those set forth in Section 1, based upon an increase in financial worth of the
Executive and Spouse or a change in applicable law, either of which would
increase the disparity between Executive and Spouse and other citizen executive
employees; provided, however, that the Payment Notice must include a
confidential statement of such financial condition or applicable law. The
provisions of Section 2 shall govern any disagreement between Executive and
Newmont regarding the amounts set forth in the Payment Notice, it being the
intention of the parties that if Newmont delivers a Disagreement Notice, and
Newmont and the Executive fail to resolve their disagreement and agree in
writing on an amount of the Tax Equalization Payment before the Payment Date,
including the requested increased amount, Newmont must nonetheless make full
payment of the Tax Equalization Payment set forth on the Payment Notice on the
Payment Date, so that applicable insurance coverage does not lapse, and
thereafter Newmont may pursue arbitration of the disagreement pursuant to
Section 2. Newmont agrees that it shall use its best efforts to ensure the
confidentiality of any financial information provided to its agents and
employees in connection with this Agreement.
(c) Limitation on Tax Equalization Payment. Notwithstanding
any other provision of this Agreement, the Company shall not be required to make
payment of a Tax Equalization Payment which exceeds the sum of the following:
3
<PAGE> 4
(i) the annual premium for such calendar year for
guaranteed renewable term life insurance with a level premium structure for a
term ending on the date which is ten years after the effective date of this
Agreement and insuring the life of Executive in the amount of $10,000,000 in
death benefits;
(ii) the annual premium for such calendar year for
guaranteed renewable term life insurance with a level premium structure for a
term ending on the date which is ten years after the effective date of this
Agreement and insuring the life of Spouse in an amount of $3,000,000 in death
benefits; and
(iii) the additional income taxes for the calendar year
which includes the Payment Date estimated to be imposed by the United States
federal government, state governments, local governments and other non-United
States jurisdictions and payable by Executive or Spouse with respect to payment
by Newmont of the Tax Equalization Payment.
(d) Effect of Uninsurability. Notwithstanding any provision of
this Agreement to the contrary, Newmont shall only be liable under this
Agreement to pay to Executive amounts equal to the Executive Premium, the
Spousal Premium and the Tax Gross-Up Amount with respect to guaranteed renewable
term life insurance in effect or which can be obtained to insure the lives of
the Executive and the Spouse, respectively, pursuant to the terms of this
Agreement. Other than Newmont's obligation to pay to Executive amounts equal to
the Executive Premium, the Spousal Premium and the Tax Gross-Up Amount with
respect to guaranteed renewable term life insurance in effect or which can be
obtained to insure the lives of the Executive and the Spouse as set forth in
this Agreement, Newmont shall have no other liability or obligation to pay or
reimburse Executive for any costs or taxes that may result in the event the
Executive or the Spouse shall be or become uninsurable and unable to obtain
additional insurance under this Agreement.
4. Term of this Agreement. The term of this Agreement shall be from the
date this Agreement is executed until the sooner of (a) ten years from such
date, (b) one year after the death or voluntary retirement of the Executive or
the Executive's termination of employment by Newmont (or any of its subsidiaries
or affiliates) for a reason other than voluntary retirement, or (c) complete
repeal of laws imposing United States federal, state or local estate,
inheritance, succession or other taxes or governmental assessments or charges
imposed by reason of the death of either the Executive or the Spouse, provided
that such repeal is not temporary and will be applicable for at least that
period of time ending on the earlier of either (i) ten years from the date this
Agreement is executed, or (ii) one year after the death or voluntary retirement
of the Executive or the Executive's termination of employment by Newmont (or any
of its subsidiaries or affiliates) for a reason other than voluntary retirement.
5. Effect of Marital Dissolution. Notwithstanding any other provision
of this Agreement, if the marriage of Executive and Spouse at any time during
the term of this Agreement is dissolved or terminated by entry of an Order of
Marital Dissolution or similar
4
<PAGE> 5
order of any court of competent jurisdiction, Spouse shall no longer be entitled
to any benefits under this Agreement, and the obligation of the Company to pay
to Executive that portion of the amount of the Tax Equalization Payment equal to
the Spousal Premium shall immediately cease. At such time, any such insurance
policy insuring the life of the Spouse shall be terminated, and any amounts of
premiums shall be refunded and returned to the Company; provided, however, that
if such premium payment has already been made by Company and no such premiums
are refunded, there shall be no obligation on Executive or Spouse to return or
repay any amounts to the Company.
6. Binding Effect. This Agreement shall be binding upon the parties
hereto and their heirs, personal representatives, administrators, successors,
assigns and any other transferee.
7. Remedies. All rights and remedies under this Agreement shall be
cumulative and non-exclusive, and the rights and remedies provided by this
Agreement are cumulative and the use of any one right or remedy by any party
shall not preclude or waive the right to use any or all other remedies. Said
rights and remedies are given in addition to any other rights the parties may
have by law, statute, ordinance or otherwise.
8. Governing Law. This Agreement shall in all respects be subject to,
and governed by, the laws of the State of Colorado.
9. Entire Agreement. The parties hereto expressly acknowledge that this
Agreement constitutes the entire contract between the parties concerning the
matters provided in this Agreement. Any other agreements or understandings, oral
or written, of any nature with respect to such matters are hereby superseded and
revoked.
10. Amendment. This Agreement shall not be modified or amended except
by means of a writing signed by the Executive, Spouse and one or more officers
duly authorized to act on behalf of Newmont.
11. Counterparts. This Agreement may be executed and delivered in any
number of counterparts, all of which when executed and delivered shall have the
force and effect of an original.
12. "Days" Defined. Any reference in this Agreement to "days" means all
calendar days, inclusive of Saturdays, Sundays and days which are legal holidays
under the laws of the United States or Colorado.
5
<PAGE> 6
13. Construction. Throughout this Agreement, the singular shall include
the plural, the plural shall include the singular and the masculine shall
include the feminine and neuter genders wherever the context so requires.
14. Titles, Headings or Captions. The titles, headings or captions in
the sections or paragraphs of this Agreement are inserted for convenience of
reference only and shall not constitute a part of this Agreement.
15. Execution and Delivery of Documents. Each of the parties hereto,
his or her heirs, legal representatives, successors and assigns, shall do all
things to execute and delivery any and all documents which may be necessary at
any time to carry out and effectuate the terms and conditions of this Agreement.
16. Notices. Any notice, demand or communication required or permitted
to be given by any provision of this Agreement shall be deemed to have been
sufficiently given or served for all purposes (1) if delivered personally to the
party or to an executive officer of the party to whom the same is directed; (2)
if sent by registered or certified mail, postage and charges prepaid, or by a
recognized overnight delivery service, addressed to the address, as appropriate,
which is set forth in this Agreement; or (3) upon facsimile transmission to the
facsimile number, as shown in this Agreement, of the party being notified.
Except as otherwise provided herein, any such notice shall be deemed to be given
under clause (1) upon delivery; under clause (2) two business days after mailing
or one business day after delivery by the overnight delivery service; or under
clause (3) upon completion of the facsimile transmission. For purposes of the
foregoing, notices shall be sent as follows:
To Executive and Spouse:
John Dow
457 Clayton Street
Denver, CO 80206
To Newmont:
Newmont Mining Corporation
1700 Lincoln Street
Denver, CO 80203
17. Waivers. The failure of any party to seek redress for violation of
or to insist upon the strict performance of any covenant or condition of this
Agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation.
6
<PAGE> 7
18. Severability. If any provision of this Agreement or the application
thereof to any Person or circumstance shall be illegal, invalid or unenforceable
to any extent, the remainder of this Agreement and the application thereof shall
not be affected and shall be enforceable to the fullest extent permitted by law.
Furthermore, a new provision shall automatically be deemed added to this
Agreement in lieu of such illegal, invalid or unenforceable provision, which new
provision is as similar in terms to such illegal, invalid or unenforceable
provision as is possible with the new provision still being legal, valid and
enforceable.
19. Reliance on Authority of Person Signing Agreement. With respect to
Newmont, Executive or Spouse shall not (1) be required to determine the
authority of the individual signing this Agreement to make any commitment or
undertaking on behalf of Newmont or to determine any fact or circumstance
bearing upon the existence of the authority of such individual or (2) be
required to see to the application or distribution of proceeds paid or credited
to individuals signing this Agreement on behalf of Newmont.
EXECUTIVE:
/s/ John Dow
--------------------------------
John Dow
Dated: August 20, 1999
SPOUSE:
/s/ Linda Dow
--------------------------------
Linda Dow
Dated: August 20, 1999
NEWMONT:
Newmont Gold Company, a Delaware corporation
By: /s/ Steven A. Conte
----------------------------
Steven A. Conte
Vice President, Human Resources
Dated: August 20, 1999
7
<PAGE> 1
EXHIBIT 12
NEWMONT MINING CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Amounts in thousands except ratio)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30, 1999
------------------
<S> <C>
Earnings:
Income before income taxes $(12,792)
Adjustments:
Net interest expense (1) 50,139
Amortization of capitalized interest 3,525
Portion of rental expense representative of interest 1,428
Undistributed loss of affiliate (9,333)
Minority interest 44,273
--------
$ 77,240
========
Fixed Charges:
Net interest expense (1) $ 50,139
Capitalized interest 15,936
Portion of rental expense representative of interest 1,428
--------
$ 67,503
========
Ratio of earnings to fixed charges 1.1
========
</TABLE>
(1) Includes interest expense of majority-owned subsidiaries and amortization of
debt issuance costs.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 20,745
<SECURITIES> 10,683
<RECEIVABLES> 40,286
<ALLOWANCES> 0
<INVENTORY> 317,363
<CURRENT-ASSETS> 490,969
<PP&E> 3,711,479
<DEPRECIATION> 1,722,546
<TOTAL-ASSETS> 3,283,203
<CURRENT-LIABILITIES> 193,059
<BONDS> 1,073,468
0
0
<COMMON> 268,128
<OTHER-SE> 1,141,250
<TOTAL-LIABILITY-AND-EQUITY> 3,283,203
<SALES> 970,860
<TOTAL-REVENUES> 1,001,036
<CGS> 601,016
<TOTAL-COSTS> 781,667
<OTHER-EXPENSES> 137,749
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 50,139
<INCOME-PRETAX> 31,481
<INCOME-TAX> (102)
<INCOME-CONTINUING> (22,023)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (22,023)
<EPS-BASIC> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
