<PAGE>
Exhibit 99.3
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial information should be
read in conjunction with the historical consolidated financial statements,
including the notes thereto, and "Management's Discussion and Analysis of
Financial Conditions and Results of Operations," of Newmont and Battle
Mountain, which are incorporated by reference in this document. This
information is presented for illustration purposes only, to reflect the merger
in accordance with the assumptions set forth below and in the notes thereto.
The pro forma information gives effect to the merger by combining the
historical consolidated statements of operations and balance sheets of Newmont
and Battle Mountain on a pooling-of-interests basis, or as if Battle Mountain
had always been part of Newmont. The combined information assumes that the
merger had occurred as of September 30, 2000 and as of the beginning of the
periods presented for the balance sheet and statements of operations,
respectively. As such, the information is not necessarily indicative of the
operating results or financial position that would have occurred if the merger
had been completed during the periods or as of the date presented. Nor is it
necessarily indicative of future operating results or the financial position of
the combined enterprise. Upon consummation of the merger, the actual financial
position and results of operations will differ, perhaps significantly, from the
pro forma information due to a variety of factors, including changes in
operating results between the dates of the pro forma information and the date
the merger is consummated and thereafter, as well as the risk factors described
in the Prospectus included in Newmont's Registration Statement on Form S-4 (No.
333-50516)
1
<PAGE>
NEWMONT AND BATTLE MOUNTAIN
PRO FORMA COMBINED STATEMENT OF OPERATIONS--UNAUDITED
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
BATTLE PRO
NEWMONT MOUNTAIN FORMA PRO FORMA
ACTUAL ACTUAL ACTUAL COMBINED
-------- -------- ------- ---------
<S> <C> <C> <C> <C>
Sales and other income................
Sales............................... $1,075.9 $179.1 $ -- $1,255.0
Dividends, interest and other....... 7.8 (3.3) 4.5
-------- ------ ------- --------
1,083.7 175.8 1,259.5
-------- ------ ------- --------
Costs and expenses
Costs applicable to sales........... 630.7 112.6 743.3
Depreciation, depletion and
amortization....................... 203.6 47.7 251.3
Exploration and research............ 48.3 10.6 58.9
General and administration.......... 40.7 8.7 49.4
Interest, net of amounts
capitalized........................ 59.9 11.2 71.1
Expenses for acquisition
settlement......................... 42.2 -- 42.2
Other............................... 17.9 8.0 25.9
-------- ------ ------- --------
1,043.3 198.8 1,242.1
-------- ------ ------- --------
Operating income (loss)............. 40.4 (23.0) 17.4
Unrealized mark-to-market gain on call
options.............................. 13.1 -- 13.1
-------- ------ ------- --------
Pre-tax income (loss) before minority
interest and equity
interest and equity loss............. 53.5 (23.0) 30.5
Income and mining income tax (expense)
benefit, net......................... 0.5 (1.3) (0.8)
Minority interest in (income) loss of
affiliates........................... (67.7) 1.0 (66.7)
Equity loss of affiliates............. (14.7) -- (14.7)
-------- ------ ------- --------
Net loss.............................. (28.4) (23.3) (51.7)
Preferred stock dividends............. -- (5.6) (5.6)
-------- ------ ------- --------
Net loss applicable to common shares.. $ (28.4) $(28.9) $ -- $ (57.3)
======== ====== ======= ========
Net loss per common share, basic and
diluted.............................. $ (0.17) $(0.13) $ (0.30)
Basic weighted average shares
outstanding.......................... 167.9 229.9 (205.8)(a) 192.0
Diluted weighted average shares
outstanding.......................... 167.9 229.9 (205.8)(a) 192.0
</TABLE>
--------
(a) To reflect pro forma shares outstanding following the merger based on an
exchange ratio of 0.105 of a share of Newmont common stock for each share
of Battle Mountain common stock and each Battle Mountain Canada
exchangeable share.
2
<PAGE>
NEWMONT AND BATTLE MOUNTAIN
PRO FORMA COMBINED STATEMENT OF OPERATIONS--UNAUDITED
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
BATTLE
NEWMONT MOUNTAIN PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Sales and other income
Sales......................... $ 970.9 $161.8 $ -- $1,132.7
Dividends, interest and
other........................ 30.1 13.4 43.5
------- ------ ------- --------
1,001.0 175.2 1,176.2
------- ------ ------- --------
Costs and expenses
Costs applicable to sales..... 601.0 107.4 708.4
Depreciation, depletion and
amortization................. 180.7 46.8 227.5
Exploration and research...... 40.2 13.1 53.3
General and administration.... 37.8 11.9 49.7
Interest, net of amounts
capitalized.................. 50.1 11.2 61.3
Other......................... 8.4 9.5 17.9
------- ------ ------- --------
918.2 199.9 1,118.1
------- ------ ------- --------
Operating income (loss)....... 82.8 (24.7) 58.1
Unrealized mark-to-market loss
on call options................ (51.3) -- (51.3)
------- ------ ------- --------
Pre-tax income (loss) before
minority interest and equity
loss........................... 31.5 (24.7) 6.8
Income and mining income tax
benefit, net................... 0.1 0.8 0.9
Minority interest in (income)
loss of affiliates............. (44.3) 4.0 (40.3)
Equity loss of affiliates....... (9.3) (26.2) (35.5)
------- ------ ------- --------
Net loss........................ (22.0) (46.1) (68.1)
Preferred stock dividends....... -- (5.6) (5.6)
------- ------ ------- --------
Net loss applicable to common
shares......................... $ (22.0) $(51.7) $ -- $ (73.7)
======= ====== ======= ========
Net loss per common share, basic
and diluted.................... $ (0.13) $(0.22) $ (0.38)
Basic weighted average shares
outstanding.................... 167.4 229.9 (205.8)(a) 191.5
Diluted weighted average shares
outstanding.................... 167.4 229.9 (205.8)(a) 191.5
</TABLE>
--------
(a) To reflect pro forma shares outstanding following the merger based on an
exchange ratio of 0.105 of a share of Newmont common stock for each share
of Battle Mountain common stock and each Battle Mountain Canada
exchangeable share.
3
<PAGE>
NEWMONT AND BATTLE MOUNTAIN
PRO FORMA COMBINED STATEMENT OF OPERATIONS--UNAUDITED
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
BATTLE
NEWMONT MOUNTAIN PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Sales and other income
Sales......................... $1,398.9 $ 228.2 $ -- $1,627.1
Dividends, interest and
other........................ 32.7 15.3 48.0
-------- ------- ------ --------
1,431.6 243.5 1,675.1
-------- ------- ------ --------
Costs and expenses
Costs applicable to sales..... 832.0 149.7 981.7
Depreciation, depletion and
amortization................. 239.6 64.2 303.8
Exploration and research...... 57.6 16.7 74.3
General and administration.... 52.6 15.2 67.8
Interest, net of amounts
capitalized.................. 62.6 15.1 77.7
Write-down of assets.......... 3.5 35.9 39.4
Other......................... 16.6 9.5 26.1
-------- ------- ------ --------
1,264.5 306.3 1,570.8
-------- ------- ------ --------
Operating income (loss)....... 167.1 (62.8) 104.3
Unrealized mark-to-market loss
on call options................ (44.8) -- (44.8)
-------- ------- ------ --------
Pre-tax income (loss) before
minority interest and equity
loss........................... 122.3 (62.8) 59.5
Income and mining income tax
expense, net................... (14.4) (7.4) (21.8)
Minority interest in (income)
loss of affiliates............. (72.4) 31.7 (40.7)
Equity loss of affiliates and
impairment..................... (10.7) (80.9) (91.6)
-------- ------- ------ --------
Net income (loss)............... 24.8 (119.4) (94.6)
Preferred stock dividends....... -- (7.5) (7.5)
-------- ------- ------ --------
Net income (loss) applicable to
common shares.................. $ 24.8 $(126.9) $ -- $ (102.1)
======== ======= ====== ========
Net income (loss) per common
share, basic and diluted....... $ 0.15 $ (0.55) $ (0.53)
Basic weighted average shares
outstanding.................... 167.5 229.9 (205.8)(a) 191.6
Diluted weighted average shares
outstanding.................... 167.8 229.9 (206.1)(a) 191.6
</TABLE>
--------
(a) To reflect pro forma shares outstanding following the merger based on an
exchange ratio of 0.105 of a share of Newmont common stock for each share
of Battle Mountain common stock and each Battle Mountain Canada
exchangeable share.
4
<PAGE>
NEWMONT AND BATTLE MOUNTAIN
PRO FORMA COMBINED STATEMENT OF OPERATIONS--UNAUDITED
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
BATTLE
NEWMONT MOUNTAIN PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Sales and other income
Sales........................... $1,453.9 $ 276.6 $ -- $1,730.5
Dividends, interest and other... 21.0 (1.2) 19.8
-------- ------- ------- --------
1,474.9 275.4 1,750.3
-------- ------- ------- --------
Costs and expenses
Costs applicable to sales....... 824.8 163.3 988.1
Depreciation, depletion and
amortization................... 289.1 79.6 368.7
Exploration and research........ 68.4 24.8 93.2
General and administration...... 49.7 14.1 63.8
Interest, net of amounts
capitalized.................... 78.8 17.8 96.6
Write-down of assets............ 614.9 104.9 719.8
Other........................... 11.1 -- 11.1
-------- ------- ------- --------
1,936.8 404.5 2,341.3
-------- ------- ------- --------
Pre-tax loss before minority
interest, equity loss and
cumulative effect of a change in
accounting principle............. (461.9) (129.1) (591.0)
Income and mining income tax
(expense) benefit, net........... 180.9 (13.8) 167.1
Minority interest in income of
affiliates....................... (66.2) (1.1) (67.3)
Minority interest in subsidiary... (4.1) -- (4.1)
Equity loss of affiliates and
impairment....................... (9.2) (96.6) (105.8)
-------- ------- ------- --------
Net loss before cumulative effect
of a change in accounting
principle........... ............ (360.5) (240.6) (601.1)
Cumulative effect of a change in
accounting principle, net........ (32.9) -- (32.9)
-------- ------- ------- --------
Net loss.......................... (393.4) (240.6) (634.0)
Preferred stock dividends......... -- (7.5) (7.5)
-------- ------- ------- --------
Net loss applicable to common
shares........................... $ (393.4) $(248.1) $ -- $ (641.5)
======== ======= ======= ========
Net loss before cumulative effect
of a change in accounting
principle per common share, basic
and diluted...................... $ (2.27) $ (1.08) $ (3.32)
Net loss per common share, basic
and diluted...................... $ (2.47) $ (1.08) $ (3.50)
Basic weighted average shares
outstanding...................... 159.0 229.8 (205.7)(a) 183.1
Diluted weighted average shares
outstanding...................... 159.0 229.8 (205.7)(a) 183.1
</TABLE>
--------
(a) To reflect pro forma shares outstanding following the merger based on an
exchange ratio of 0.105 of a share of Newmont common stock for each share
of Battle Mountain common stock and each Battle Mountain Canada
exchangeable share.
5
<PAGE>
NEWMONT AND BATTLE MOUNTAIN
PRO FORMA COMBINED STATEMENT OF OPERATIONS--UNAUDITED
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
BATTLE
NEWMONT MOUNTAIN PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Sales and other income
Sales........................... $1,572.8 $344.9 $ -- $1,917.7
Dividends, interest and other... 55.2 (1.0) 54.2
-------- ------ ------ --------
1,628.0 343.9 1,971.9
-------- ------ ------ --------
Costs and expenses
Costs applicable to sales....... 790.5 234.3 1,024.8
Depreciation, depletion and
amortization................... 265.8 72.8 338.6
Exploration and research........ 98.4 24.8 123.2
General and administration...... 66.4 13.6 80.0
Interest, net of amounts
capitalized.................... 77.1 9.4 86.5
Write-down of assets............ 9.5 -- 9.5
Merger and related expenses..... 162.7 2.7 165.4
Other........................... 25.7 -- 25.7
-------- ------ ------ --------
1,496.1 357.6 1,853.7
Pre-tax income (loss) before
minority interest, equity loss
and cumulative effect of a change
in accounting principle.......... 131.9 (13.7) 118.2
Income and mining income tax
benefit, net..................... 7.9 10.7 18.6
Minority interest in income of
affiliates....................... (66.9) (1.7) (68.6)
Minority interest in subsidiary... (4.5) -- (4.5)
Equity income of affiliates....... -- (1.0) (1.0)
-------- ------ ------ --------
Net income (loss) before
cumulative effect of a change in
accounting principle............. 68.4 (5.7) 62.7
Cumulative effective of a change
in accounting principle.......... -- (3.7) (3.7)
-------- ------ ------ --------
Net income (loss)................. 68.4 (9.4) 59.0
Preferred stock dividends......... -- (7.5) (7.5)
-------- ------ ------ --------
Net income (loss) applicable to
common shares.................... $ 68.4 $(16.9) $ -- $ 51.5
======== ====== ====== ========
Net income (loss) before
cumulative effect of a change in
accounting principle per common
share, basic and diluted......... $ 0.44 $(0.05) $ 0.31
Net income (loss) per common
share, basic and diluted......... $ 0.44 $(0.07) $ 0.29
Basic weighted average shares
outstanding...................... 156.2 229.7 (205.6)(a) 180.3
Diluted weighted average shares
outstanding...................... 156.3 229.7 (205.6)(a) 180.4
</TABLE>
--------
(a) To reflect pro forma shares outstanding following the merger based on an
exchange ratio of 0.105 of a share of Newmont common stock for each share
of Battle Mountain common stock and each Battle Mountain Canada
exchangeable share.
6
<PAGE>
NEWMONT AND BATTLE MOUNTAIN
PRO FORMA COMBINED BALANCE SHEET--UNAUDITED
AT SEPTEMBER 30, 2000
(IN MILLIONS)
<TABLE>
<CAPTION>
BATTLE
NEWMONT MOUNTAIN PRO FORMA PRO FORMA
ACTUAL ACTUAL ADJUSTMENTS COMBINED
-------- -------- ----------- ---------
Assets
<S> <C> <C> <C> <C>
Cash and cash equivalents.......... $ 48.3 $ 11.2 $ -- $ 59.5
Restricted cash.................... -- 0.4 0.4
Short-term investments............. 5.7 -- 5.7
Accounts receivable................ 48.0 10.7 58.7
Inventories........................ 364.8 31.8 396.6
Marketable equity securities....... -- 36.9 36.9
Other current assets............... 81.1 7.2 88.3
-------- ------ ------ --------
Current assets................... 547.9 98.2 646.1
Property, plant and mine
development, net.................. 1,941.0 275.0 2,216.0
Investment in Batu Hijau........... 534.1 -- 534.1
Long-term inventory................ 173.2 0.9 174.1
Deferred income tax assets......... 226.9 -- 226.9
Restricted cash.................... -- 41.9 41.9
Other long-term assets............. 41.3 15.3 56.6
-------- ------ ------ --------
Total assets..................... $3,464.4 $431.3 $ -- $3,895.7
======== ====== ====== ========
<CAPTION>
Liabilities
<S> <C> <C> <C> <C>
Current portion of long-term debt.. $ 28.3 $ 10.6 $ -- $ 38.9
Short-term debt.................... -- -- --
Debt due upon disposal of Lihir.... -- 30.0 30.0
Accounts payable................... 47.5 16.3 63.8
Current portion of deferred income
tax liabilities................... 7.4 14.9 22.3
Other accrued liabilities.......... 162.4 24.0 20.0 (a) 206.4
-------- ------ ------ --------
Current liabilities.............. 245.6 95.8 20.0 361.4
Long-term debt..................... 1,065.3 155.1 1,220.4
Deferred revenue from sale of
future production................. 137.2 -- 137.2
Reclamation and remediation
liabilities....................... 112.5 30.9 143.4
Fair value of written call
options........................... 69.4 -- 69.4
Deferred income and mining tax
liabilities....................... 45.6 55.4 101.0
Other long-term liabilities........ 165.1 26.8 191.9
-------- ------ ------ --------
Total liabilities................ 1,840.7 364.0 20.0 2,224.7
-------- ------ ------ --------
Minority interest.................... 164.8 4.5 169.3
-------- ------ ------ --------
<CAPTION>
Stockholders' equity
<S> <C> <C> <C> <C>
Common stock....................... 269.1 13.5 25.1 (b) 307.7
Convertible preferred stock........ -- 110.6 110.6
Additional paid-in capital......... 1,079.1 343.7 (25.1)(b) 1,397.7
Stock to be issued for acquisition
settlement 40.0 -- 40.0
Retained earnings (deficit)........ 74.4 (356.1) (20.0)(a) (301.7)
Accumulated other comprehensive
loss.............................. (3.7) (48.9) (52.6)
-------- ------ ------ --------
Total stockholders' equity....... 1,458.9 62.8 (20.0) 1,501.7
-------- ------ ------ --------
Total liabilities and
stockholders' equity............ $3,464.4 $431.3 $ -- $3,895.7
======== ====== ====== ========
</TABLE>
(a) Provision for estimated combined merger-related expenses.
(b) To reflect pro forma shares outstanding following the merger based on
an exchange ratio of 0.105 of a share of Newmont common stock for each
share of Battle Mountain common stock and each Battle Mountain Canada
exchangeable share.
7
<PAGE>
NEWMONT MINING AND BATTLE MOUNTAIN
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION--UNAUDITED
1. The pro forma financial information combines the historical statements of
operations and balance sheets of Newmont and Battle Mountain under the
pooling-of-interests method of accounting. The pro forma combined statements
of operations give effect to the merger as if it had occurred at the
beginning of the periods presented and the pro forma combined balance sheet
gives effect to the merger as if it had occurred on September 30, 2000.
Pro forma financial data is presented for informational purposes only. The
combined financial statements are not necessarily indicative of the results
of operations or of the financial position that would have occurred had the
merger been completed during the periods or as of the date presented. They
are also not necessarily indicative of the combined company's future results
of operations or financial position. In particular, the combined company
expects to realize significant operating cost savings as a result of the
merger. No adjustment has been included in the pro forma financial
information for these anticipated operating cost savings.
2. Certain amounts have been reclassified to conform to the pro forma
presentation.
3. Newmont and Battle Mountain expect to incur one-time merger-related expenses
of approximately $35 million, of which $20 million primarily relates to
investment advisory and professional fees and $15 million to employee
benefit and severance costs. These expenses will be charged to income in the
period incurred. A provision for $20 million of these expenses is reflected
in the combined balance sheet, but not in the statements of operations. The
amount of these expenses is a preliminary estimate and is subject to change.
4. The pro forma issuance of shares of Newmont common stock represents 0.105 of
a share of Newmont common stock for each outstanding share of Battle
Mountain common stock and each Battle Mountain Canada exchangeable share.
5. Revenue recognition accounting policies for Newmont and Battle Mountain are
described below. Certain aspects of these practices differ between the
companies in part based on their respective negotiated contractual
arrangements. Subsequent to the merger, these arrangements may be modified
over time in a manner that will result in more uniformity of practice. The
effect of any such modifications is not expected to be significant.
NEWMONT:
It is common practice in the mining industry, unlike most other industries,
to recognize revenue upon the completion of the production process. Gold is
produced, and revenue is recognized, when it is poured into dore bars or
buttons at the mine site following leaching or milling extraction processes
and electrowinning or similar refining processes resulting in gold content
of up to 93%. Dore is then sent to a third-party refiner where it is
further refined to an almost pure gold or salable form. The gold content of
dore is determined by sample weighing and assaying of poured gold prior to
shipment. Gold content in each shipment is subject to final weights and
assays performed by the refiner upon receipt of the shipment. Adjustments
related to weight and/or assay differences have ranged from plus or minus
0.1% to 0.7%. Dore is shipped once a week and the risk of loss
contractually passes to the transporter upon shipment and to the refiner
upon receipt of the shipment.
Third-party refining is required before delivery to the customer. However,
pursuant to contracts with third-party refiners, on the day dore is shipped
to the refinery, the refiner releases refined gold it has on hand for
Newmont's account representing approximately 90% to 99% of the estimated
amount of gold in transit to the refinery. Newmont then sells this refined
gold to its customers. Sales to customers are prearranged one month in
advance of sale based on estimated weekly output of refined gold at the
refinery and the sales price is determined on the date of such output. The
maximum length of time between revenue recognition
8
<PAGE>
NEWMONT MINING AND BATTLE MOUNTAIN
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS--UNAUDITED--(CONTINUED)
and delivery to the customer/receipt of payment, ranges from 7 to 20 days
at Newmont's various mines. With respect to gold produced but not yet
shipped, sales revenue is based on the estimated number of ounces of gold
in dore multiplied by the London Metal Exchange closing price on the last
day of the month. Related third-party refining costs are minimal and
estimable and are accrued at the time of revenue recognition. Subsequent
adjustments related to price estimates were less than 1% for the periods
presented and are recorded in the following month. Risks associated with
recognition of revenue when gold is produced include gold price
fluctuations between the end of the month and the date that refined gold is
output at the refinery.
BATTLE MOUNTAIN:
Battle Mountain's revenue recognition policies are common practice in the
mining industry and unlike most other industries. Revenue is recognized
when gold and silver in the form of dore (a combination of gold and silver)
or concentrate is produced at mines whose product has a high gold content
(in excess of 70%) and for which the additional costs of refining and
marketing are minimal (less than 1% of the value). The only condition for
recognition of revenue in this instance is the production of the gold dore
or concentrate. In order to get the product to the dore stage the gold-
bearing ore must be mined, transported to a mill or heap leaching pad where
the ore is ground and/or crushed. The ground and/or crushed ore is then
chemically treated to extract the gold into a solution. This solution is
then subjected to various processes to precipitate a gold-bearing material
that can be melted and poured into a mold. At this point the product is not
interchangeable and in salable form. Approximately 39% of Battle Mountain's
revenue was recognized when products were produced for the three years
ended December 31, 1999.
The remaining 61% of revenue for the three years ended December 31, 1999
was recognized when gold and silver in the form of dore or concentrate was
shipped from the mine site at mines whose product has a high content of
metals other than gold (e.g. silver and/or copper). Further refining and
marketing costs are minimal (less than 1% of the value). The only
conditions for recognition of revenue in this instance are the shipment of
the gold dore or concentrate and the passing of the risk of loss to a third
party. Risk of loss passes contractually to the transporter when the
product is picked up at the mine and then to the refiner upon receipt at
the refinery, however title does not pass at this time. In the event that a
loss occurs to the product prior to delivery to the final purchaser the
amount of the loss would be determined based on the number of ounces
indicated on the bill of lading which is an estimate based on assays
performed at the mine and an agreed to price.
At all of Battle Mountain's locations, revenue estimates for essentially
all of the gold produced or shipped are made based on sales prices
determined via sales contracts which are entered into upon production or up
to ten days after production. Revenue estimates are based on spot gold
prices for minimal amounts of gold not covered by sales contracts.
Estimated smelter losses and transportation and refining costs are also
included in these revenue estimates. Net revenues are adjusted in future
periods for any difference between the actual amount received and the
estimate. The maximum net revenue adjustment for any given shipment
attributable to quantity alone was plus or minus approximately 1.6% and the
maximum net revenue adjustment for any given shipment attributable to price
was plus or minus approximately 1.7% in 1997, 1998 and 1999. At all
locations the risk of loss transfers from Battle Mountain at the time of
shipment. The maximum amount of time between initial revenue recognition
and final delivery of Battle Mountain's products and transfer of risk of
loss to a purchaser under a firm agreement providing a fixed or
determinable price for any given sale during 1997, 1998 and 1999 was four,
five and seven months, respectively. The amount of time between initial
revenue recognition and final delivery has increased over the past three
years for cash management purposes. The average time between production of
dore or concentrate and the completion of the refining process which
produces 99% pure gold and silver is
9
<PAGE>
approximately 30 days. The time between the completion of the refining
process and delivery to the final purchaser exceeds 30 days at the Golden
Giant mine on a regular basis for cash management purposes.
Realization of the value of Battle Mountain's inventories of gold and
silver for which revenue has been recognized is subject to the risk that
the counterparty (purchaser) will not have the ability to make payment upon
final delivery which would require Battle Mountain to sell to another
purchaser at a different price. All purchasers' credit ratings were
investment grade and Battle Mountain has never experienced a default on the
part of a purchaser. Battle Mountain is also subject to the risk that the
refiner will not be able to make delivery to the customer which can occur
if the refiner is unable to complete the refining process, the product is
lost due to theft or bankruptcy or for some other reason. Battle Mountain
mitigates this risk by dealing only with reputable refiners. Battle
Mountain has never experienced a loss resulting from a refiner's inability
to make delivery. Realization of the value of those inventories maintained
by locations whose functional currency is other than the U.S. dollar are
subject to risks associated with foreign currency exchange rate changes.
At operations on care and maintenance, revenues from gold recoveries are
credited against production costs. During the year ended December 31, 1999,
$7.1 million of revenue was credited against production costs for the San
Cristobal and Reona mines because these mines were placed on care and
maintenance effective January 1, 1999. There were no revenues credited
against production costs for the years ended December 31, 1998 and 1997
because no operations were on care and maintenance during those periods.
6. Explanation of selected items included in the pro forma financial
statements:
a. Dividends, interest and other for Newmont in 1999 included a $13 million
gain from the sale of an exploration property in the second quarter and
an $8 million gain from the sale of equity securities in another mining
company early in the third quarter. In 1998 and 1997, $8.3 million and
$6.5 million, respectively, was included for recoveries from business
interruption insurance. In 1997, $23.7 million was included from closing
certain put and call option contracts.
b. Dividends, interest and other for Battle Mountain included foreign
currency exchange gains or (losses) of $(6.6) million and $6.9 million,
for the nine months ended September 30, 2000 and 1999, respectively and
$8.2 million, ($12.4 million) and ($7.8 million) for 1999, 1998 and
1997, respectively.
c. In 1998, as a result of a prolonged period of low gold prices, Newmont
and Battle Mountain adjusted the carrying value of certain long-lived
assets to their estimated fair values resulting in a write-down of
$614.9 million and $104.9 million, respectively. In 1999, Battle
Mountain adjusted the carrying value of its Crown Jewel project as a
result of permitting uncertainties, resulting in a write-down of $35.9
million. As a result of continuing low gold prices through 2000, the
combined company may experience further asset impairments.
d. For Newmont, other expenses included $7.9 million, $4.9 million and $5
million for environmental obligations associated with former mining
activities in 1999, 1998 and 1997, respectively. 1999 included $5.4
million for costs related to terminating the mining contract at
Yanacocha and 1997 included $10 million for costs associated with a
workforce reduction.
e. For Battle Mountain, other expenses included $5.6 million and $9.5
million in the third quarters of 2000 and 1999, respectively for
environmental remediation charges associated with former mining
activities at its San Luis property.
f. For the nine months ended September 30, 2000 and 1999, Newmont included
a non-cash, unrealized mark-to-market gain (loss) of $13.1 million and
$(51.3) million, respectively, reflecting the difference between the
fair value of call option contracts on the date sold and the fair value
on September 30, 2000 and 1999, respectively. An increase or decrease in
fair value represents an unrealized gain or loss to the counterparty
holding these contracts and a corresponding unrealized loss or gain to
Newmont. The charge in fair value primarily resulted from the price
changes and the volatility in the gold spot market during the periods.
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g. In 1997, Newmont incurred merger and related expenses of $162.7 million
($112.3 million, net of tax and minority interest) associated with its
merger with Santa Fe Pacific Gold Corporation and Battle Mountain
incurred $2.7 million associated with its merger with Hemlo Gold Mines
Inc.
h. Included in Battle Mountain's equity loss of affiliates for the nine
months ended September 30, 1999, and in 1999 and 1998 was an impairment
charge of $23.4 million ($20.2 million, net of minority interest), $76.2
million ($46.8 million, net of minority interest) and $90 million,
respectively. These charges were associated with its investment in Lihir
that owns and operates a mine in Papua New Guinea and resulted from
decreases in the market value of Lihir stock. Battle Mountain's interest
in Lihir was held by its former consolidated subsidiary Niugini Mining
Limited and was accounted for by Niugini as an equity investment. In
February 2000, Niugini merged with Lihir.
i. In 1998, Newmont recorded $32.9 million for the cumulative effect of a
change in accounting principle for start-up costs. In 1997, Battle
Mountain recorded $3.7 million for the cumulative effect of changes in
accounting principles for depreciation, depletion and amortization.
j. As a result of the merger of Niugini and Lihir, Battle Mountain's equity
interest in Lihir was classified as marketable equity securities
available for sale. For the nine months ended September 30, 2000, Battle
Mountain recorded, in other comprehensive loss, an unrealized loss of
$24.8 million as a result of a decrease in the market value of Lihir
shares.
k. Accumulated other comprehensive loss for Newmont related primarily to
minimum pension liability adjustments and for Battle Mountain, to
foreign currency translation adjustments ($24.1 million) and to
unrealized losses on marketable equity securities ($24.8 million).
l. In the third quarter of 2000, Newmont resolved a long-standing legal
dispute regarding the acquisition of an additional interest in Minera
Yanacocha, a gold mining operation located in Peru. The Company will
issue $40 million of NMC common stock under terms of the settlement and,
including expenses, $42.2 million was charged to income in the third
quarter of 2000. The number of shares of common stock to be issued will
be based on the weighted average stock price for 20 consecutive trading
days ending approximately three trading days prior to closing, which is
anticipated before the end of 2000.
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