<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
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: 1-9184
NEWMONT GOLD COMPANY
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-2526632
- ---------------------------- ------------------------------------
(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 166,584,614 shares of common stock outstanding on August 7, 1997.
Exhibit index is on page 32.
There are 38 pages included in this report.
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
NEWMONT GOLD COMPANY AND SUBSIDIARIES
Statements of Consolidated Income
(In thousands, except per share)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
----------------------
1997 1996
--------- ---------
<S> <C> <C>
Sales and other income
Sales $ 421,760 $ 261,424
Dividends, interest and other 5,659 8,165
--------- ---------
427,419 269,589
--------- ---------
Costs and expenses
Costs applicable to sales 211,741 156,963
Depreciation, depletion and amortization 66,140 48,722
Exploration and research 26,314 19,346
General and administrative 17,722 16,309
Interest, net of capitalized interest
of $3,840 in 1997 and $5,161 in 1996 19,652 12,998
Merger and related asset write-offs 157,675 -
Other 6,202 3,324
--------- --------
505,446 257,662
--------- --------
Income (loss) before equity income
(loss) and income taxes (78,027) 11,927
Equity in income (loss) of affiliated
companies (2,986) 11,045
--------- --------
Pre-tax income(loss) (81,013) 22,972
Income tax benefit 28,809 2,734
Minority interest in income of
Minera Yanacocha (16,775) -
--------- --------
Net income (loss) $ (68,979) $ 25,706
========= ========
Net income (loss) per common share $ (0.41) $ 0.15
========= ========
Weighted average number of shares of
common stock and common stock
equivalents outstanding 166,540 166,805
Cash dividends declared per Newmont Gold
Company common share $ 0.12 $ 0.12
Cash dividend declared per Santa Fe Pacific
Gold Corporation common share $ - $ 0.05
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE> 3
NEWMONT GOLD COMPANY AND SUBSIDIARIES
Statements of Consolidated Income
(In thousands, except per share)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------
1997 1996
--------- ---------
<S> <C> <C>
Sales and other income
Sales $ 776,815 $ 498,048
Dividends, interest and other 39,883 16,070
--------- ---------
816,698 514,118
--------- ---------
Costs and expenses
Costs applicable to sales 395,747 297,301
Depreciation, depletion and amortization 126,629 96,600
Exploration and research 48,397 36,578
General and administrative 34,357 32,811
Interest, net of capitalized interest
of $5,980 in 1997 and $9,056 in 1996 38,941 26,346
Merger and related asset write-offs 157,675 -
Other 8,130 7,053
--------- ---------
809,876 496,689
--------- ---------
Income before equity income (loss)
and income taxes 6,822 17,429
Equity in income (loss) of affiliated
companies (4,475) 22,577
--------- ---------
Pre-tax income 2,347 40,006
Income tax benefit 15,388 2,061
Minority interest in income of
Minera Yanacocha (32,024) -
--------- ---------
Net income (loss) $ (14,289) $ 42,067
========= =========
Net income (loss) per common share $ (0.09) $ 0.25
========= =========
Weighted average number of shares of
common stock and common stock
equivalents outstanding 166,514 165,981
Cash dividends declared per Newmont Gold
Company common share $ 0.24 $ 0.24
Cash dividend declared per Santa Fe Pacific
Gold Corporation common share $ - $ 0.05
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE> 4
NEWMONT GOLD COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---------- ------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 114,160 $ 227,053
Short-term investments 13,927 12,724
Accounts receivable 30,487 29,663
Inventories 397,763 279,315
Other current assets 89,426 52,233
---------- ----------
Current assets 645,763 600,988
Property, plant and mine
development, net 2,577,268 2,391,872
Other long-term assets 248,267 289,270
---------- ----------
Total assets $3,471,298 $3,282,130
========== ==========
Liabilities
Short-term debt $ 22,732 $ 45,981
Current portion of long-term debt 36,507 19,250
Accounts payable 81,257 99,647
Purchase price payable for Minera
Yanacocha 59,100 -
Other accrued liabilities 171,337 113,381
---------- ----------
Current liabilities 370,933 278,259
Long-term debt 1,139,044 1,039,875
Reclamation and remediation
liabilities 78,244 71,702
Deferred tax liability 55,987 91,508
Other long-term liabilities 156,655 133,825
---------- ----------
Total liabilities 1,800,863 1,615,169
---------- ----------
Minority interest in Minera Yanacocha 46,855 -
Contingencies
Stockholders' Equity
Common stock 1,102 1,102
Capital in excess of par value 758,114 754,200
Retained earnings 866,461 913,927
Treasury stock (2,097) (2,268)
---------- ----------
Total stockholders' equity 1,623,580 1,666,961
---------- ----------
Total liabilities and
stockholders' equity $3,471,298 $3,282,130
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE> 5
NEWMONT GOLD COMPANY AND SUBSIDIARIES
Statements of Consolidated Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------
1997 1996
---------- ---------
<S> <C> <C>
Operating activities:
Net income (loss) $ (14,289) $ 42,067
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation, depletion and amortization 126,629 96,600
Merger related asset write-offs 24,749 -
Deferred taxes (46,594) (1,153)
Minority interest, net of dividends (8,598) -
Increase in operating assets:
Accounts receivable (706) (3,048)
Inventories (102,787) (44,355)
Other assets (900) (22,538)
Increase in operating liabilities:
Accounts payable and accrued expenses 21,852 3,301
Other liabilities 16,150 2,150
Other operating (259) 954
--------- ---------
Net cash provided by operating activities 15,247 73,978
--------- ---------
Investing activities:
Cash acquired in Minera Yanacocha transaction 40,705 -
Additions to property, plant and mine
development (186,475) (283,307)
Advances to joint venture and affiliates (4,363) (3,218)
Other (367) 2,588
--------- ---------
Net cash used in investing activities (150,500) (283,937)
--------- ---------
Financing activities:
Proceeds from short-term borrowings 4,591 7,932
Repayments of short-term borrowings (27,840) -
Proceeds from long-term borrowings 706,000 110,000
Repayments of long-term borrowings (627,697) -
Proceeds from issuance of common stock 3,027 266,932
Dividends paid on common stock (33,177) (32,920)
Other (2,544) (306)
--------- ---------
Net cash provided by financing activities 22,360 351,638
---------- ---------
Net (decrease) increase in cash and cash
equivalents (112,893) 141,679
Cash and cash equivalents at beginning
of period 227,053 94,994
---------- ---------
Cash and cash equivalents at end of period $ 114,160 $ 236,673
========== =========
Supplemental information:
Interest paid, net of amounts capitalized
of $5,980 in 1997 and $9,056 in 1996 $ 32,689 $ 23,334
Income taxes paid $ 21,528 $ 3,000
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE> 6
NEWMONT GOLD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(1) Basis of Preparation of Financial Statements
These unaudited interim consolidated financial statements of Newmont Gold
Company ("NGC") 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. As further discussed in Note 2, the
consolidated financial statements for periods prior to the merger with Santa Fe
Pacific Gold Corporation ("Santa Fe") have been restated to reflect the merger
as a pooling of interests.
In the opinion of management, these financial statements reflect all
adjustments which are necessary for a fair statement of the results for the
periods presented. All adjustments, other than those described in Note 2, were
of a normal recurring nature. These interim financial statements should be
read in conjunction with the financial statements of the Company and those of
Santa Fe included in their respective 1996 Annual Reports on Form 10-K.
Newmont Mining Corporation ("NMC") owns approximately 94% of NGC's common
stock. All of NMC's operations are held through NGC.
In addition to adjustments made to conform the accounting policies of the
Company and Santa Fe as discussed in Note 2, certain prior year amounts have
been reclassified to conform to the current year presentation.
(2) Merger with Santa Fe Pacific Gold Corporation
On May 5, 1997, the merger between Santa Fe and a wholly-owned subsidiary
of NMC was completed, in which the outstanding shares of common stock of Santa
Fe were converted into approximately 56.5 million shares of NMC common stock.
NMC also reserved approximately 566,000 shares of its common stock for issuance
in connection with outstanding Santa Fe stock options that were assumed by NMC
in the merger. The merger qualified as a tax-free reorganization and was
accounted for as a pooling of interests. In conjunction with the merger, NGC
issued shares of common stock to NMC equal to the number of shares of NMC
common stock issued in the merger. As a result, Santa Fe became a wholly-owned
subsidiary of NGC. In addition, NGC issued options to NMC to acquire
additional shares of NGC common stock having the same terms as the Santa Fe
stock options assumed by NMC in the merger. NGC's consolidated financial
statements have been restated for all periods prior to the merger to include
the operations of Santa Fe, adjusted to conform with NGC's accounting policies
and presentation.
6
<PAGE> 7
Both NGC and Santa Fe are engaged in the mining and processing of gold ores
and exploration and development of gold properties. Separate pre-merger sales
and net income of the Company and Santa Fe, through the date of the merger,
merger adjustments and post-merger sales and net income were as follows:
<TABLE>
<CAPTION>
Three Months Ended June 30,
1997 1996
---------- ----------
(In thousands)
<S> <C> <C>
Sales
Pre-Merger
Company $ 95,211 $181,216
Santa Fe 37,592 80,208
Merger adjustments - -
Post-merger 288,957 -
--------- --------
Total $ 421,760 $261,424
========= ========
Net Income (loss)
Pre-Merger
Company $ 11,142 $ 21,571
Santa Fe 4,552 5,844
Merger adjustments (117,373) (1,709)
Post-merger 32,700 -
-------- --------
Total $(68,979) $ 25,706
======== ========
Six Months Ended June 30,
1997 1996
---------- ----------
(In thousands)
Sales
Pre-Merger
Company $ 357,316 $335,921
Santa Fe 130,540 162,127
Merger adjustments - -
Post-merger 288,959 -
--------- --------
Total $ 776,815 $498,048
========= ========
Net Income
Pre-Merger
Company $ 33,718 $ 33,359
Santa Fe 31,702 12,072
Merger adjustments (112,409) (3,364)
Post-merger 32,700 -
--------- --------
Total $ (14,289) $ 42,067
========= ========
</TABLE>
Merger adjustments reflect conforming accounting policy changes,
transaction fees, other one-time expenses associated with the merger and the
tax effect of such adjustments. Accounting policy changes were primarily
related to the accounting treatment for deferred mining costs. Santa Fe
included certain depreciation, depletion and amortization charges in deferred
mining costs. To the extent Santa Fe capitalized depreciation, depletion and
amortization charges as deferred mining costs or as inventory, restatement
adjustments have been made to reflect these charges against earnings in the
appropriate period. In addition, in-process inventories were not maintained on
the same basis as NGC, which resulted in certain balance sheet
reclassifications.
Merger expenses of $157.7 million ($116.5 million net of tax) consisted of
$133.0 million of transaction costs and $24.7 million in asset write-downs.
The transaction costs included a $65.2 million fee paid to Homestake Mining
Company
7
<PAGE> 8
to terminate a definitive merger agreement between Santa Fe and Homestake
Mining Company, investment advisory fees of $20.3 million, employee benefit and
severance costs of $18.0 million and professional fees of $16.7 million. With
the exception of $10.3 million, all merger expenses had been disbursed as of
June 30, 1997. The asset write-offs related to certain Santa Fe assets that
did not meet NGC's valuation criteria, including a write-down of the Elkhorn,
Montana project and the write-off of duplicative facilities, equipment and
information systems costs.
(3) Inventories
<TABLE>
<CAPTION>
At June 30, At December 31,
1997 1996
------------ ---------------
(In thousands)
<S> <C> <C>
Current:
Ore and in-process inventories $225,740 $138,199
Precious metals 82,844 58,866
Materials and supplies 87,185 80,544
Other 1,994 1,706
-------- --------
$397,763 $279,315
======== ========
Non-current:
Ore in stockpiles (included
in other long-term assets) $ 82,921 $ 85,652
======== ========
</TABLE>
(4) Acquisition of Additional Interest in Minera Yanacocha
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"). In
September 1994, BRGM announced its intention to transfer its 24.7% interest in
Minera Yanacocha, S.A. ("Minera Yanacocha") to another entity. 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 a provision in the bylaws of Minera Yanacocha giving
shareholders preemptive rights on the proposed sale or transfer of any
shareholder's interest. In February 1995, an appellate court in Peru issued a
preliminary ruling in favor of the Company and Buenaventura, both of whom
elected to exercise their preemptive rights to acquire their proportionate
share of the 24.7% interest. In accordance with the court ruling, Minera
Yanacocha canceled the BRGM shares and issued shares representing interests in
Minera Yanacocha of 13.35% to the Company and 11.35% to Buenaventura. The
Company deposited $48.6 million for its additional interest, together with the
additional shares, with a Peruvian bank pending the final resolution of the
case. The Company borrowed the $48.6 million from the same Peruvian bank with
the right of set off against the deposit, and accordingly, these amounts have
been netted in the accompanying balance sheet. In September 1996, the trial
court determined that the Company and Buenaventura have the right to acquire
the 24.7% interest for a purchase price of $109.3 million, $59.1 million
attributable to the 13.35% interest of the Company. As established by such
ruling, the preemptive rights were triggered in November 1993 and thus the
valuation of the shares held in escrow were calculated as of such date. The
trial court ruling was appealed to the Peruvian Superior Court. In order to
prevail in the Superior Court, the decision of the trial court had to be
affirmed by the votes of three Superior Court justices. Legal arguments were
made to a panel of three Superior Court justices. Two of the justices voted to
uphold the trial court ruling and the third justice voted not to uphold the
ruling. A fourth Superior Court justice was then appointed to hear the case,
and this justice voted to uphold the trial
8
<PAGE> 9
court ruling in February 1997, resulting in the three votes required to
prevail. As a result of the Superior Court decision, the Company now believes
that it is probable that the additional interest will be acquired and that the
Company will retain control of Minera Yanacocha. Therefore, as of February
1997, the Company has considered the additional interest to have been acquired
and has consolidated Minera Yanacocha in its financial statements to reflect
the increase in its ownership from 38% to 51.35%. The operations of Minera
Yanacocha have been consolidated in 1997 with the Company's ownership interest
at 38% for the period from January 1, 1997 to January 31, 1997, and 51.35%
thereafter.
Opposing parties have filed a request for review of the decision by the
Superior Court of Peru. Peruvian counsel has advised the Company that
decisions of the Superior Court can be modified by the Supreme Court only in
very limited instances and that it is not likely that any further review will
be granted.
The following pro forma consolidated income statements assume the
acquisition of the additional interest in Minera Yanacocha occurred on January
1, 1996 and the pro forma condensed consolidated balance sheet assumes the
acquisition of the additional interest occurred on December 31, 1996. The pro
forma financial statements are presented for illustrative purposes only and are
not necessarily indicative of the consolidated results of operations and
financial position which would have been realized had the acquisition of the
additional interest been considered to occur as of the dates for which the pro
forma financial statements are presented. The pro forma financial statements
also are not necessarily indicative of the consolidated results of operations
or financial position in the future. For the quarter and six months ended June
30, 1997, the differences between the pro forma results and reported results
are insignificant.
9
<PAGE> 10
NEWMONT GOLD COMPANY AND MINERA YANACOCHA
PRO FORMA CONSOLIDATED INCOME STATEMENT - UNAUDITED
(In thousands, except per share)
FOR THREE MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Newmont Minera Pro Forma Pro Forma
Gold Yanacocha Adjustments Consolidated
-------- --------- ----------- ------------
<S> <C> <C> <C> <C>
Sales and other income
Sales $261,424 $ 83,097 $344,521
Dividends, interest and
other 8,165 416 8,581
-------- -------- --------- --------
269,589 83,513 353,102
-------- -------- --------- --------
Costs and expenses
Costs applicable to sales 156,963 23,918 $ (632)(A)
(263)(B)
(161)(D) 179,825
Depreciation, depletion
and amortization 48,722 5,512 3,319 (C) 57,553
Exploration and research 19,346 6,385 25,731
General and administrative 16,309 - 263 (B) 16,572
Interest, net 12,998 1,164 14,162
Other 3,324 576 3,900
-------- -------- -------- --------
257,662 37,555 2,526 297,743
-------- -------- -------- --------
Income before equity income
(loss) and income taxes 11,927 45,958 (2,526) 55,359
Equity in income (loss) of
affiliated companies 11,045 - (12,224)(E)
(161)(D)
(632)(A) (1,972)
-------- -------- -------- --------
Pre-tax income 22,972 45,958 (15,543) 53,387
Income tax (provision) benefit 2,734 (13,788) (153)(F) (11,207)
Minority interest in income of
Minera Yanacocha - (15,651)(G) (15,651)
-------- -------- -------- --------
Net income $ 25,706 $ 32,170 $(31,347) $ 26,529
======== ======== ======== ========
Income per common share $ 0.15 $ 0.16
======== ========
Weighted average number of
shares of common stock
and common stock equivalents
outstanding 166,805 166,805
======== ========
</TABLE>
(A) To eliminate royalties paid by Minera Yanacocha to a subsidiary NGC.
(B) To eliminate management fees paid by Minera Yanacocha to a subsidiary of
NGC.
(C) Estimated additional amortization of excess purchase price over net assets
acquired.
(D) Reclassification of the Company's share (38%) of management fees
charged to Minera Yanacocha.
(E) Elimination of equity income recognized for Minera Yanacocha to reflect
consolidation.
(F) Additional adjustment to taxes required for consolidation of Minera
Yanacocha.
(G) Minority interest (48.65%) in income of Minera Yanacocha.
10
<PAGE> 11
NEWMONT GOLD COMPANY AND MINERA YANACOCHA
PRO FORMA CONSOLIDATED INCOME STATEMENT - UNAUDITED
(In thousands, except per share)
FOR SIX MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Newmont Minera Pro Forma Pro Forma
Gold Yanacocha Adjustments Consolidated
-------- --------- ----------- ------------
<S> <C> <C> <C> <C>
Sales and other income
Sales $498,048 $154,676 $652,724
Dividends, interest and
other 16,070 1,010 17,080
-------- -------- -------- --------
514,118 155,686 669,804
-------- -------- -------- --------
Costs and expenses
Costs applicable to sales 297,301 44,708 $ (1,142)(A)
(495)(B)
(287)(D) 340,085
Depreciation, depletion
and amortization 96,600 12,437 6,397 (C) 115,434
Exploration and research 36,578 8,133 44,711
General and administrative 32,811 - 495 (B) 33,306
Interest, net 26,346 2,464 28,810
Other 7,053 452 7,505
-------- -------- -------- --------
496,689 68,194 4,968 569,851
-------- -------- -------- --------
Income before equity income
(loss) and income taxes 17,429 87,492 (4,968) 99,953
Equity in income (loss) of
affiliated companies 22,577 - (23,115)(E)
(287)(D)
(1,142)(A) (1,967)
-------- -------- -------- --------
Pre-tax income 40,006 87,492 (29,512) 97,986
Income tax (provision) benefit 2,061 (26,662) (292)(F) (24,893)
Minority interest in income of
Minera Yanacocha - (29,594)(G) (29,594)
-------- -------- -------- --------
Net income $ 42,067 $ 60,830 $(59,398) $ 43,499
======== ======== ======== ========
Income per common share $ 0.25 $ 0.26
======== ========
Weighted average number of
shares of common stock
and common stock equivalents
outstanding 165,981 165,981
======== ========
</TABLE>
(A) To eliminate royalties paid by Minera Yanacocha to a subsidiary of NGC.
(B) To eliminate management fees paid by Minera Yanacocha to a subsidiary
of NGC.
(C) Estimated additional amortization of excess purchase price over net assets
acquired.
(D) Reclassification of the Company's share (38%) of management fees
charged to Minera Yanacocha.
(E) Elimination of equity income recognized for Minera Yanacocha to reflect
consolidation.
(F) Additional adjustment to taxes required for consolidation of Minera
Yanacocha.
(G) Minority interest (48.65%) in income of Minera Yanacocha.
11
<PAGE> 12
NEWMONT GOLD COMPANY AND MINERA YANACOCHA
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET - UNAUDITED
(In thousands)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Newmont Minera Pro Forma Pro Forma
Gold Yanacocha Adjustments Consolidated
---------- --------- ----------- ------------
<S> <C> <C> <C> <C>
Assets
Cash and cash equivalents $ 227,053 $ 40,705 $ 267,758
Inventories 279,315 15,661 294,976
Other 94,620 28,848 123,468
---------- -------- -------- -----------
Current assets 600,988 85,214 686,202
---------- -------- -----------
Property, plant and mine
development, net 2,391,872 106,308 $ 53,368 (A)
(14,445)(B)
(41,115)(C) 2,495,988
Other long-term assets 289,270 1,887 (2,843)(A) 288,314
---------- -------- --------- ----------
Total assets $3,282,130 $193,409 $ (5,035) $3,470,504
========== ======== ========= ==========
Liabilities
Short-term debt and current
portion of long-term debt $ 65,231 $ 14,256 $ 79,487
Other current liabilities 213,028 31,190 $ 50,525 (A) 294,743
---------- -------- --------- ----------
Current liabilities 278,259 45,446 50,525 374,230
Long-term debt 1,039,875 24,244 1,064,119
Other long-term liabilities 297,035 15,520 312,555
---------- -------- --------- ----------
Total liabilities 1,615,169 85,210 50,525 1,750,904
---------- -------- --------- ----------
Minority interest in Minera
Yanacocha - 52,639 (D) 52,639
---------- -------- --------- ----------
Stockholders' Equity 1,666,961 108,199 (14,445)(B)
(41,115)(C)
(52,639)(D) 1,666,961
---------- ------- --------- ----------
Total liabilities
and stockholders'
equity $3,282,130 $193,409 $ (5,035) $3,470,504
========== ======== ========= ==========
</TABLE>
(A) To record acquisition of additional 13.35% interest.
(B) Elimination of 13.35% of Minera Yanacocha's net book value.
(C) Elimination of the Company's investment in Minera Yanacocha to reflect
consolidation.
(D) To reflect minority interest in Minera Yanacocha.
12
<PAGE> 13
Prior to January 1, 1997, the carrying value of the Company's 38% equity
investment in Minera Yanacocha was included in Other long-term assets and the
Company's 38% share of earnings was included in Equity in income (loss) of
affiliated companies.
Excluded from the statement of consolidated cash flows are the effects of
non-cash transactions. The following reflects the non-cash adjustments made to
the Company's consolidated balance sheet on January 1, 1997 for the Minera
Yanacocha transaction described above (in thousands):
<TABLE>
<S> <C>
Assets
Inventories $ 15,661
Other current assets 28,848
--------
Current assets 44,509
Property, plant and mine development, net 106,308
Other long-term assets 1,887
--------
Total assets $152,704
========
Liabilities
Current portion of long-term debt $ 14,256
Other current liabilities 31,190
--------
Current liabilities 45,446
Long-term debt 24,244
Other long-term liabilities 15,520
--------
Total liabilities $ 85,210
========
</TABLE>
In addition, in connection with the Minera Yanacocha acquisition described
above, the Company recorded $37.6 million in Property, plant and mine
development for the excess of the purchase price of the additional interest
over the net book value of such interest. The Company has recorded a $59.1
million liability for the purchase price of the additional interest.
(5) Batu Hijau Project
In July 1996, the Company and Sumitomo Corporation ("Sumitomo") entered
into a definitive partnership agreement to develop and operate the Batu Hijau
copper/gold deposit in Indonesia. The agreement was finalized in May 1997 upon
the Indonesian government's approval of Sumitomo's participation in the
project. Under the terms of the agreement with Sumitomo, the Company
contributed its interest in the company that owns the project and Sumitomo will
contribute an agreed upon amount of cash, expected to be approximately $238
million of which $164 million has been contributed as of June 30, 1997. Under
this agreement, the Company has retained a 45% interest in the company that
owns the project, Sumitomo holds a 35% interest in such company, and an
unrelated Indonesian company owns the remaining 20%.
The estimated cost for development of the open pit mine, mill, and
infrastructure including employee housing, a port, electrical generation
facilities, interest during construction, cost escalations and working capital
is expected to approximate $1.9 billion. Financing was signed in July 1997,
which subject to satisfaction of certain conditions, will fund $1.0 billion of
the project costs, with the remaining $0.9 billion to be provided by the
Company
13
<PAGE> 14
and Sumitomo. The financing, which is guaranteed by the Company and Sumitomo,
56.25% and 43.75%, respectively, until project completion tests are met, will be
non-recourse to the Company thereafter (except with respect to a $125 million
support facility that the Company and Sumitomo have agreed to provide) includes
commitments from three export credit agencies with participation of commercial
banks. Repayment will be amortized over a 13-year period beginning six months
after project completion, and bears interest at blended fixed and floating
rates.
As a result of the contemplated ownership structure, the Company began
accounting for its investment in Batu Hijau as an equity investment effective
July 1996. The Company's investment at June 30, 1997, which is included in
Other long-term assets, was $45.9 million.
(6) Earnings per Share
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 "Earnings per Share" ("SFAS No. 128"),
which specifies the computation, presentation and disclosure requirements for
earnings per share. SFAS No. 128 is effective for periods ending after
December 15, 1997 and requires retroactive restatement of prior period earnings
per share. The statement replaces the "primary earnings per share" calculation
with a "basic earnings per share" and redefines the "dilutive earnings per
share" computation. Adoption of the statement is not expected to have any
effect on the Company's reported income per common share.
(7) Commodity Instruments
The Company has entered into gold loans, forward sales contracts and
purchased put and written call options to protect the selling price for certain
anticipated gold production. Gains and losses realized on such instruments, as
well as any cost or revenue associated therewith, are recognized in sales when
the related gold is produced. Included in Dividends, interest and other income
for the six months ended June 30, 1997 was $23.6 million ($15.3 million net of
tax) relating to the close-out of put and call option contracts. Put and call
options, when exercisable at contract maturity date, were planned for
conversion into spot deferred forward contracts, however, due to the early
close-out of such contracts, the related income received was recognized as
other income in the period received.
Subsequent to June 30, 1997, the Company purchased approximately 1.1
million ounces of gold ranging from $329 per ounce to $343 per ounce, to offset
Santa Fe hedge positions ranging from $412 per ounce to $436 per ounce. The
gain from this transaction will be recorded as the gold is produced over the
next twelve months.
(8) Contingencies
Environmental Obligations
Estimated future reclamation and remediation costs are based principally on
legal and regulatory requirements. At June 30, 1997 and December 31, 1996,
$41.6 million and $32.2 million, respectively, were accrued for reclamation
and remediation costs relating to currently producing mineral properties.
14
<PAGE> 15
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, $45.4 million and $49.8
million were accrued for such obligations at June 30, 1997 and December 31,
1996, 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 100% greater
or 40% lower than the amount accrued at June 30, 1997. The amounts accrued for
these matters are reviewed periodically based upon facts and circumstances
available at the time. Changes in estimates are charged to other expense in
the period estimates are revised.
Details about certain of the more significant sites involved are discussed
below.
Idarado Mining Company ("Idarado") - 80.1% owned by NGC
In July 1992, NMC and Idarado signed a consent decree with the State of
Colorado ("State") which was agreed to by the U.S. District Court of Colorado
to settle a lawsuit brought by the State under the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), generally referred to as
the "Superfund Act." Idarado settled natural resources damages and past and
future response costs and provided habitat enhancement work. In addition,
Idarado agreed in the consent decree to undertake specified remediation work
at its former mining site in the Telluride/Ouray area of Colorado. The Company
expects to complete the remediation work at this property by the end of 1997.
If the remediation work does not meet specific technical criteria specified in
the consent decree, the State and court have reserved the right to require
Idarado to perform other remediation work. Idarado and the Company have
obtained a $16.3 million letter of credit to secure their obligations under the
consent decree.
Resurrection Mining Company ("Resurrection") - 100% owned by NGC
In 1983, the State of Colorado filed a lawsuit under the Superfund Act
which involves a Resurrection Mining Company and Asarco Incorporated ("Asarco")
joint venture mining operation near Leadville, Colorado. This action was
subsequently consolidated with a lawsuit filed by the U.S. Environmental
Protection Agency ("EPA") in 1986, with the EPA taking the lead role. The
proceedings seek to compel the defendants to remediate the impacts of
pre-existing, historic mining activities that date back to the mid-1800's which
the government agencies claim are causing substantial environmental problems in
the area. The lawsuits have named NMC, Resurrection, the joint venture and
Asarco as defendants in the proceedings. The EPA is also proceeding against
other companies with interests in the area.
The EPA divided the remedial work into two phases. Phase I addresses the
Yak Tunnel, a drainage and access tunnel owned by the joint venture. Phase II
addresses the remainder of the site.
In 1988 and 1989, the EPA issued administrative orders with respect to
Phase I work for the Yak Tunnel. The joint venture, Asarco, Resurrection and
15
<PAGE> 16
NMC have collectively implemented those orders by constructing a water
treatment plant which was placed in operation in early 1992. The joint venture
is in negotiations regarding remaining remedial work for Phase I, which
primarily consists of environmental monitoring and operating and maintenance
activities.
The parties have entered into a consent decree with respect to Phase II
which apportions liabilities and responsibilities for selected portions of 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 which will be required under Phase II.
The government agencies may also seek to recover for damages to natural
resources.
Dawn Mining Company ("Dawn") - 51% owned by NGC
Dawn leased a currently inactive open-pit uranium mine on the Spokane
Indian Reservation in the State of Washington. The mine is subject to
regulation by agencies of the U.S. Department of Interior, the Bureau of Indian
Affairs and the Bureau of Land Management, as well as the EPA. Dawn also owns
a nearby uranium millsite facility.
In 1991, Dawn's lease was terminated. As a result, Dawn was required to
file a formal mine closure and reclamation plan. The Department of Interior
has commenced an Environmental Impact Study to analyze Dawn's proposed plan and
to consider alternate closure and reclamation plans for the mine. Dawn cannot
predict at this time what type of mine reclamation plan may be selected by the
Department of Interior. Dawn does not have sufficient funds to pay for the
reclamation plan it proposed, for any alternate plan, or for the closure of its
mill.
The Department of Interior previously notified Dawn that when the lease was
terminated, it would seek to hold Dawn and NMC (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. If asserted, the Company will vigorously
contest any such claims. The Company cannot reasonably predict the likelihood
or outcome of any future action against Dawn or the Company arising from this
matter.
As part of its mill site closure plan, Dawn has received a license to
accept certain byproduct material as defined by the Atomic Energy Act. In
March 1997, the Superior Court for Thurston County in the State of Washington
upheld the granting of this license. This ruling is now being appealed by
opposing parties. If Dawn is successful in receiving material under the
license, the funds generated would be utilized to close and reclaim both the
mill and the mine.
Insurance Coverage
The Company carried insurance policies for which it filed claims for the
costs of certain of its remediation activities. Prior to 1993, three of the
insurance companies commenced actions against NMC seeking judgments that they
had no liability. In the fall of 1993, NMC instituted a comprehensive lawsuit
against its carriers. In the first quarter of 1995, settlement in certain of
the insurance litigation was reached. Settlement discussions continue with
respect to additional insurance litigation. Trial of this litigation has been
scheduled for late 1997. The Company intends to vigorously pursue its claims
with respect to the remaining litigation and believes that it is reasonably
16
<PAGE> 17
possible that amounts will be recovered, although no such amounts are accrued.
Advanced Royalty
In a 1993 asset exchange transaction, a wholly-owned subsidiary of Santa
Fe, transferred a coal lease with Chaco Energy Company ("Chaco") to Hanson
Natural Resources Company ("HNRC") with respect to which the subsidiary had
collected $484.0 million in advance royalty payments. The lease provides for
HNRC to collect another $390.0 million from 1994 through 2018 from Chaco. In
the event of a title failure as stated in the lease, this subsidiary has a
primary obligation to refund the advance royalty payments previously collected
and has a secondary obligation as assignor to HNRC to refund any of the $390.0
million HNRC collects if HNRC fails to meet its refund obligation to Chaco.
The subsidiary has an indemnity agreement with HNRC for the latter amounts.
The Company has no direct liability to Chaco under the coal lease. The
subsidiary has title insurance on the leased coal deposits in the amount of
$240.0 million covering the secondary obligation. The Company and the
subsidiary regard the circumstances entitling Chaco to a refund as remote. The
Company has agreed with Chaco to maintain the subsidiary's net worth at
$108.0 million until July 1, 2025.
(9) Supplementary Data
The ratio of earnings to fixed charges for the six months ended June 30,
1997 was 1.03. The Company guarantees certain third party debt which had total
interest obligations of $0.6 million for the six months ended June 30, 1997.
The Company and NMC have not been required to pay any interest on these
obligations in the past, nor does the Company expect to have to pay any amounts
with respect to such debt in the future. Therefore, such amounts have not been
included in the ratio of earnings to fixed charges.
17
<PAGE> 18
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
The following discussion summarizes the results of operations of Newmont
Gold Company ("NGC") and its subsidiaries (collectively, the "Company") for the
quarters and six months ended June 30, 1997 and 1996 and changes in its
financial condition from December 31, 1996. As further discussed in Note 2 of
Item 1, the consolidated financial statements have been restated for all
periods presented to reflect the merger with Santa Fe Pacific Gold Corporation
("Santa Fe") as a pooling of interests. Newmont Mining Corporation ("NMC")
owns approximately 94% of NGC's common stock. All of NMC's operations are held
through NGC. This discussion should be read in conjunction with the
Management's Discussion and Analysis included in the Company's and Santa Fe's
respective 1996 Annual Reports on Form 10-K.
RESULTS OF OPERATIONS
As discussed in Note 4 of Item 1, in February 1997, the Company's interest
in Minera Yanacocha S.A. ("Minera Yanacocha") increased from 38% to 51.35%.
Therefore, the operations of Minera Yanacocha have been consolidated in 1997.
In 1996 Minera Yanacocha was accounted for under the equity method. The
variances that result from this change in treatment are included in the
discussion below.
The Company recorded a net loss of $69.0 million, or $0.41 per share, and
$14.3 million, or $0.09 per share, in the quarter and six months ended June 30,
1997 compared with net income of $25.7 million, or $0.15 per share and $42.1
million, or $0.25 per share, in the respective 1996 periods. The six months
ended June 30, 1997 included $23.6 million ($15.3 million net of tax) of income
on the close-out of put and call option contracts and $157.7 million ($116.5
million net of tax) of expenses associated with the Santa Fe merger and the
write-off of certain Santa Fe assets that do not meet the Company's valuation
criteria. Excluding the income on the close-out of option contracts and
merger-related expenses the Company earned $47.5 million, or $0.29 per share,
and $86.9 million, or $0.52 per share, in the quarter and six months ended June
30, 1997. These increases compared to 1996 were primarily attributable to
equity gold production increasing to 1,028,600 ounces and 1,875,800 ounces in
the quarter and six months ended June 30, 1997 from 744,600 ounces and
1,397,700 ounces in the respective 1996 periods and a $28 and $27 decrease in
cash costs per equity ounce of gold sold from the respective quarter and six
months ended June 30, 1996.
Consolidated sales revenue was $421.8 million and $776.8 million for the
three and six months ended June 30, 1997 compared to $261.4 million and $498.0
million for the respective 1996 periods. Consolidated sales revenue increased
primarily from gold production of 1,153,600 ounces and 2,121,600 ounces in the
quarter and six months ended June 30, 1997, compared to 663,400 ounces and
1,248,700 ounces in the respective 1996 periods. Consolidated sales revenue in
1997 included sales of 257,000 ounces ($88.1 million) for the second quarter
and 485,200 ounces ($167.2 million) for the first six months from Minera
Yanacocha. Consolidated sales revenue in 1996 does not include the Company's
share of Minera Yanacocha since it was accounted for under the equity method.
The average gold price received per ounce on the Company's consolidated
production was $366 and $367 in the quarter and six months ended June 30, 1997
compared to an average gold price per ounce of $397 and $400 for the respective
1996 periods. On an equity basis, the Company's average gold price received
per ounce was $368 and $370 in the quarter and six months ended June 30, 1997
compared to $396 and $400 per ounce for the respective 1996 periods. The
18
<PAGE> 19
average gold price realized for the quarter and six months ended June 30, 1997
was approximately $26 per ounce and $24 per ounce higher than market prices due
to gold price hedging contracts. Subsequent to June 30, 1997, the Company
purchased approximately 1.1 million ounces of gold at $329 per ounce to offset
Santa Fe hedge positions at $420 per ounce. The gain on this transaction will
be recorded as the gold is produced over the next twelve months. The
profitability of the Company's operations is significantly affected by the
market price of gold. Gold prices can fluctuate widely and are affected by
numerous factors beyond the Company's control.
The effects of the changes in the average gold price received and the
consolidated production levels on sales revenue between the June 30, 1997 and
1996 periods are reflected in the following table (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
<S> <C> <C>
Increase (decrease) in
sales revenue due to:
Production $184,037 $327,724
Average gold price received (23,701) (48,957)
-------- -------
160,336 $278,767
======== =======
</TABLE>
Dividends, interest and other income were $5.7 million and $39.9 million
for the three and six months ended June 30, 1997 compared to $8.2 million and
$16.1 million for the respective 1996 periods. Dividends, interest and other
income for the six months ended June 30, 1997 included $23.6 million from the
close-out of put and call option contracts and $5.1 million from the sale of a
uranium property. Put and call options contracts, when exercisable at contract
maturity date, were planned for conversion into spot deferred forward
contracts, however, due to the early close-out of such contracts, the related
income received was recognized as other income in the period received. In the
three and six months ended June 30, 1996 the Company received $3.1 million in
business interruption insurance proceeds relating to the refractory ore
treatment plant at the Nevada operations.
Costs applicable to sales were $211.7 million and $395.7 million for the
quarter and six months ended June 30, 1997 compared to $157.0 million and
$297.3 million for the quarter and six months ended June 30, 1996. The
increase in costs applicable to sales in 1997 was due primarily to the
consolidation of Minera Yanacocha ($25.4 million and $50.7 million for the
three and six months ended June 30, 1997), as well as the costs associated with
Minahasa, an Indonesian project that commenced operations in April 1996, and
increased production from the Company's Nevada operations.
19
<PAGE> 20
The Company's costs applicable to sales per ounce of gold sold were as
follows for the quarters and six months ended June 30, 1997 and 1996:
<TABLE>
<CAPTION>
For Three Months Ended June 30,
----------------------------------------
Consolidated Per Equity
Ounce of Production Ounce of Production
------------------- -------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash operating costs $177 $225 $188 $211
Royalties 4 12 3 10
Other cash costs 2 0 2 0
---- ---- ---- ----
Total cash costs 183 237 193 221
Other 2 2 2 2
Total costs applicable to sales $185 $239 $195 $223
==== ==== ==== ====
For Six Months Ended June 30,
----------------------------------------
Consolidated Per Equity
Ounce of Production Ounce of Production
------------------- -------------------
1997 1996 1997 1996
---- ---- ---- ----
Cash operating costs $178 $223 $188 $209
Royalties 5 13 5 12
Other cash costs 2 1 2 1
---- ---- ---- ----
Total cash costs 185 237 195 222
Other 2 2 2 2
---- ---- ---- ----
Total costs applicable to sales $187 $239 $197 $224
==== ==== ==== ====
</TABLE>
The above 1996 consolidated amounts do not take into account the Company's
interest in Minera Yanacocha because it was accounted for on the equity basis.
The decrease in consolidated per ounce costs between years was the result of
the inclusion of Minera Yanacocha in the consolidated results as well as
decreases in costs incurred at the Nevada operations and the international
operations. On an equity basis, the decrease in per ounce costs was
attributable to decreases in costs at the Nevada operations as well as the
impact of the additional interest in Minera Yanacocha.
Depreciation, depletion and amortization ("DD&A") was $66.1 million and
$126.6 million in the quarter and six months ended June 30, 1997 compared to
$48.7 million and $96.6 million in the respective 1996 periods. The increases
of $17.4 million and $30.0 million, respectively, were primarily due to the
consolidation of Minera Yanacocha ($8.4 million and $16.5 million), the
commencement of operations at the Minahasa project in April 1996 and the
start-up of new processing facilities at the Nevada operations.
Following are mine operation results from the Company's primary operating
areas.
NEVADA
The Company's primary North American operations are located in the Carlin
Region, hereafter referred to as "Carlin" and in the Winnemucca Region,
hereafter referred to as "Winnemucca", collectively referred to as "Nevada".
Nevada's gold production increased to 723,000 ounces and 1,312,500 ounces in
the quarter and six months ended June 30, 1997, respectively, from 543,100
ounces and 1,048,100 ounces in the corresponding 1996 periods primarily due to
improved production rates and ore grades at existing Carlin facilities,
increased
20
<PAGE> 21
production related to the start-up of a new mill and autoclave at Winnemucca
and improved recoveries from leach operations. Further production increases
are expected in late 1997 upon completion of a second autoclave at Winnemucca.
Sales were $265.8 million and $482.6 million in the quarter and six months
ended June 30, 1997 compared to $214.4 million and $418.4 million in the
quarter and six months ended June 30, 1996. The net increase in sales was
attributable to the increase in ounces produced partially offset by a reduction
in the average gold price per ounce received.
Costs applicable to sales were $150.9 million and $277.2 million in the
quarter and six months ended June 30, 1997 compared to $131.2 million and
$253.1 million for the quarter and six months ended June 30, 1996. The
increase was primarily due to an increase in Nevada production partially offset
by a reduction in the amount of royalty-burdened ore produced.
The following table reflects Nevada's costs applicable to sales per ounce
of gold sold for the respective periods:
<TABLE>
<CAPTION>
For the Three Months Ended June 30,
-----------------------------------
1997 1996
---- ----
<S> <C> <C>
Cash operating costs $202 $226
Royalties 7 14
Other cash costs 3 0
---- ----
Total cash costs 212 240
Other 2 2
---- ----
Total costs applicable to sales $214 $242
==== ====
For the Six Months Ended June 30,
---------------------------------
1997 1996
---- ----
Cash operating costs $202 $222
Royalties 7 17
Other cash costs 3 2
---- ----
Total cash costs 212 241
Other 2 2
---- ----
Total costs applicable to sales $214 $243
==== ====
</TABLE>
The decrease in cash operating costs per ounce was primarily due to the
increase in production resulting from higher ore grades and recoveries. In the
period ended June 30, 1996 the refractory ore treatment plant at Carlin did not
operate at optimal capacity due to repairs and maintenance.
DD&A increased to $40.8 million and $77.9 million in the quarter and six
months ended June 30, 1997 from $37.7 million and $75.6 million in the
corresponding periods in 1996. This increase was primarily due to the start-up
of new processing facilities at Winnemucca and increased production partially
offset by lengthening estimated useful lives of certain assets as a result of
the addition of refractory ore reserves.
The Company is assessing the most economical way to access high-grade ore,
at the Betze Post pit, that has been affected by a pit wall slide. No impact
on 1997 costs or production is expected. However, some production scheduled
for 1998 and 1999 will be deferred.
21
<PAGE> 22
CALIFORNIA
The Company operates a heap leach mine at the Mesquite mine in Imperial
County in southern California. Mesquite's gold production increased to 66,000
ounces and 122,600 ounces in the quarter and six months ended June 30, 1997,
respectively, from 51,300 and 105,900 in the corresponding 1996 periods.
Mesquite production has benefited from significantly increased recoveries as
the average grade of ore placed on leach pads has decreased. Sales were $27.4
million and $50.7 million in the quarter and six months ended June 30, 1997,
respectively, compared to $21.2 million and $43.5 million in the corresponding
1996 period. The net increase in sales was attributable to the increase in
ounces produced partially offset by a reduction in the average gold price per
ounce received.
Costs applicable to sales were $15.3 million and $28.3 million in the
quarter and six months ended June 30, 1997, respectively, compared to $12.9
million and $25.6 million in the corresponding 1996 periods. The increase in
costs applicable to sales was due to an increase in production, however, costs
applicable to sales per ounce of gold sold have decreased primarily because of
these higher production levels.
The following table reflects Mesquite' costs applicable to sales per ounce
of gold sold for the respective periods:
<TABLE>
<CAPTION>
For the Three Months Ended June 30,
-----------------------------------
1997 1996
---- ----
<S> <C> <C>
Cash operating costs $228 $250
Royalties 0 0
Other cash costs 0 0
---- ----
Total cash costs 228 250
Other 3 2
---- ----
Total costs applicable to sales $231 $252
==== ====
For the Six Months Ended June 30,
---------------------------------
1997 1996
---- ----
Cash operating costs $228 $239
Royalties 0 0
Other cash costs 0 0
---- ----
Total cash costs 228 239
Other 3 3
---- ----
Total costs applicable to sales $231 $242
==== ====
</TABLE>
DD&A increased to $6.3 million and $12.7 million in the quarter and six
months ended June 30, 1997, respectively, from $4.9 million and $10.6 million
in the corresponding 1996 periods. The increase was attributable to equipment
purchased in 1996 and 1997.
ZARAFSHAN-NEWMONT
Zarafshan-Newmont Joint Venture ("Zarafshan-Newmont"), is a 50% - 50% joint
venture between a subsidiary of the Company and two Uzbekistan governmental
entities which began production in September 1995. The Company accounts for
Zarafshan-Newmont on a proportional consolidation basis. Zarafshan-Newmont's
gold production increased to 117,700 ounces (58,800 equity ounces) and 227,100
22
<PAGE> 23
ounces (113,500 equity ounces) in the quarter and six months ended June 30,
1997 from 84,300 ounces (42,100 equity ounces) and 135,700 ounces (67,800
equity ounces) in the corresponding 1996 periods primarily due to operational
improvements that were made to the plant throughout 1996 and 1997. In 1997 the
plant reached and sustained design capacity. Sales attributable to the
Company's interest were $19.9 million and $38.7 million in the quarter and six
months ended June 30, 1997 compared to $16.2 million and $26.5 million in the
corresponding 1996 periods. The net increase in sales was due to an increase
in ounces produced partially offset by a reduction in the average gold price
per ounce received.
Costs applicable to sales attributable to the Company's interest were $12.0
million and $24.0 million in the quarter and six months ended June 30, 1997
compared to $8.5 million and $14.2 million for the corresponding 1996 periods.
The increase was primarily due to the increase in production. The following
table reflects Zarafshan-Newmont's costs applicable to sales per ounce of gold
sold:
<TABLE>
<CAPTION>
For the Three Months Ended June 30,
-----------------------------------
1997 1996
---- ----
<S> <C> <C>
Cash operating costs $204 $200
Other cash costs 0 0
---- ----
Total cash costs 204 200
Other 1 1
---- ----
Total costs applicable to sales $205 $201
==== ====
For the Six Months Ended June 30,
---------------------------------
1997 1996
---- ----
Cash operating costs $211 $209
Other cash costs 0 0
---- ----
Total cash costs 211 209
Other 1 1
---- ----
Total costs applicable to sales $212 $210
==== ====
</TABLE>
The net increase in total cash costs per ounce is due to a reduction in the
estimated gold recovery rate partially offset by the increase in production.
DD&A attributable to the Company's interest was $3.1 million and $6.1
million for the quarter and six months ended June 30, 1997 compared to $2.5
million and $5.4 million in the quarter and six months ended June 30, 1996.
MINERA YANACOCHA
Minera Yanacocha's production for the quarter and six months ended June 30,
1997 totaled 257,000 ounces (132,000 equity ounces) and 485,200 ounces (239,400
equity ounces). In the quarter and six months ended June 30, 1996 Minera
Yanacocha produced 213,700 total ounces (81,200 equity ounces) and 391,900
total ounces (149,000 equity ounces). The increased production was due
primarily to higher ore tons mined and recovery rates. The Company expects
Minera Yanacocha's production in 1997 to be approximately 1 million ounces.
Sales were $88.1 million and $167.2 million in the quarter and six months ended
June 30, 1997 compared to $83.1 million and $154.7 million in the quarter and
six months ended June 30, 1996. The net increase in sales was due to an
increase in ounces produced partially offset by a decrease in the average gold
23
<PAGE> 24
price per ounce received. The Company reflected 1996 production in Equity in
income (loss) of affiliated companies in the 1996 periods.
Costs applicable to sales were $25.4 million and $50.7 million for the
quarter and six months ended June 30, 1997 compared to $23.9 million and $44.7
million for the corresponding 1996 periods (which were included in equity
income in 1996). Costs increased primarily as a result of the increased
production; however, the increase in production has resulted in a decrease in
the cost applicable to sales on a per ounce basis. The following table
reflects Minera Yanacocha's costs applicable to sales per ounce of gold sold:
<TABLE>
<CAPTION>
For the Three Months Ended June 30,
-----------------------------------
1997 1996
---- ----
<S> <C> <C>
Cash operating costs $ 90 $ 96
Royalties 11 13
Other cash costs 0 0
---- ----
Total cash costs 101 109
Other 3 3
---- ----
Total costs applicable to sales $104 $112
==== ====
For the Six Months Ended June 30,
--------------------------------
1997 1996
---- ----
Cash operating costs $ 95 $ 99
Royalties 11 12
Other cash costs 0 0
---- ----
Total cash costs 106 111
Other 3 3
---- ----
Total costs applicable to sales $109 $114
==== ====
</TABLE>
DD&A increased to $8.4 million and $16.5 million in the quarter and six
months ended June 30, 1997 from $5.5 million and $12.4 million in the quarter
and six months ended June 30, 1996, which the Company reflected in Equity in
income of affiliated companies in the 1996 periods. The increase was primarily
due to amortization and depreciation on property, plant and mine development
costs placed in service in 1996 and 1997.
MINAHASA
The Company began commercial production at the Minahasa property in
Indonesia in April 1996. Minahasa's gold production in the second quarter of
1997 was 48,800 ounces compared to 21,200 ounces in 1996. Gold production in
the six months ended June 30, 1997 totaled 87,800 ounces. In addition, 5,700
ounces were produced in the first six months of 1996, before commercial
operations commenced, that are not included in the 1996 gold production, and
the revenue from these ounces was credited against capitalized costs of the
project. Better than expected start-up of the refractory ore treatment plant
in 1997 and greater than expected availability of oxide ore has resulted in an
increase in expected total production for 1997 to at least 180,000 ounces.
Sales were $20.6 million and $37.6 million for the quarter and six months ended
June 30, 1997 compared to $9.6 million for the 1996 quarter. The average gold
price per ounce received was $423 and $429 for the quarter and six months ended
June 30, 1997, which were higher than market prices due to gold price hedging
contracts for approximately 10,400 ounces per month at an average price of $454
per ounce.
24
<PAGE> 25
Costs applicable to sales were $8.1 million and 15.5 million for the
quarter and six months ended June 30, 1997, respectively, compared to $4.4
million in the three months ended June 30, 1996.
The following table reflects Minahasa's costs applicable to sales per ounce
of gold sold:
<TABLE>
<CAPTION>
For the Three Months Ended June 30,
-----------------------------------
1997 1996
---- ----
<S> <C> <C>
Cash operating costs $177 $194
Royalties 5 10
Other cash costs 0 0
---- ----
Total cash costs 182 204
Other 2 3
---- ----
Total costs applicable to sales $184 $207
==== ====
For the Six Months Ended June 30,
---------------------------------
1997 1996
---- ----
Cash operating costs $181 $194
Royalties 5 10
Other cash costs 0 0
---- ----
Total cash costs 186 204
Other 2 3
---- ----
Total costs applicable to sales $188 $207
==== ====
</TABLE>
The increase in costs applicable to sales and the decrease in costs
applicable to sales per ounce of gold sold resulted from a full six months of
production in 1997.
Total cash costs per ounce for 1997 are expected to be approximately 15%
lower than the $224 expended in 1996 due to additional ounces produced in 1997
and increased operating efficiencies.
DD&A was $3.7 million and $7.2 million for the quarter and six months ended
June 30, 1997, respectively, compared to $2.2 million in the quarter ended June
30, 1996.
OTHER
Following is a discussion of certain other consolidated expenses of the
Company.
Exploration and research expense increased to $26.3 million and $48.4
million in the quarter and six months ended June 30, 1997 from $19.3 million
and $36.6 million in the corresponding 1996 periods, primarily due to the
consolidation in 1997 of Minera Yanacocha ($3.7 million and $5.6 million,
respectively) and increased activities in South America and Central Asia
(including Uzbekistan, Kazakhstan and the Kyrgyz Republic).
25
<PAGE> 26
Exploration and research expense by geographic location was as follows:
<TABLE>
<CAPTION>
For the Three Months Ended June 30,
-----------------------------------
1997 1996
------- -------
(in thousands)
<S> <C> <C>
United States $ 9,777 $ 9,579
South America 7,822 2,327
Central Asia 2,623 1,064
Southeast Asia 3,906 3,709
Other 2,186 2,667
------- -------
$26,314 $19,346
======= =======
For the Six Months Ended June 30,
---------------------------------
1997 1996
------- -------
(in thousands)
United States $20,766 $18,717
South America 11,488 4,849
Central Asia 4,792 1,843
Southeast Asia 7,713 6,672
Other 3,638 4,497
------- -------
$48,397 $36,578
======= =======
</TABLE>
Interest expense, net of amounts capitalized, increased to $19.7 million
and $38.9 million in the quarter and six months ended June 30, 1997 from $13.0
million and $26.3 million in the corresponding 1996 periods, respectively. The
increase was primarily due to the consolidation of Minera Yanacocha in 1997 and
a reduction in the amount of interest capitalized on certain Winnemucca
projects placed in service during 1997.
Income tax benefits of $28.8 million and $15.4 million were recorded for
the quarter and six months ended June 30, 1997 compared to benefits of $2.7
million and $2.1 million in the quarter and six months ended June 30, 1996. The
increase in tax benefit for 1997 was primarily due to costs and related
write-offs from the Santa Fe merger, as partially offset by consolidation of
Minera Yanacocha (previously accounted for on an equity basis).
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended June 30, 1997 the Company's cash outlays
included $186.5 million for capital expenditures and $33.2 million for dividend
payments. Capital expenditures included approximately $117.5 million on
projects at the Nevada operations, which were primarily associated with
processing equipment capitalized mining costs and underground development. In
addition, $43.2 million, $12.9 million and $5.7 million was spent by the
Company on minesite development at Minera Yanacocha, Minahasa and
Zarafshan-Newmont, respectively. These expenditures were funded from
operating cash flows existing cash balances and net borrowings of $57.0
million. The Company used $102.8 million during 1997 for inventory increases,
which principally resulted from stockpiling ore at the Nevada operations. Net
borrowings during the six months ended June 30, 1997 included $250.0 million of
drawdowns under a new $1.0 billion revolving credit facility which replaced
separate facilities held by the Company and Santa Fe. Minera Yanacocha also
closed and received proceeds on a $100.0 million Rule 144A financing which will
be used to finance capital expansion and operating needs at Minera Yanacocha.
26
<PAGE> 27
Cash on hand, operating cash flow, short-term and long-term borrowings will
be used to fund the Company's capital expenditures and other cash requirements
for 1997.
Other than the inventory increases previously discussed, the significant
changes in the balance sheet from December 31, 1996 to June 30, 1997 were
primarily the result of the consolidation of Minera Yanacocha. See Note 4 of
Item 1 for a pro forma balance sheet of the Company consolidating Minera
Yanacocha as of December 31, 1996. As discussed in such note, Minera Yanacocha
is consolidated in 1997 as the result of a favorable Peruvian Superior Court
ruling in February 1997, which confirmed that the Company was entitled to
increase its interest in Minera Yanacocha from 38% to 51.35%. Opposing parties
have filed a request for review of the decision by the Superior Court of Peru.
Peruvian counsel has advised the Company that decisions of the Superior Court
can be modified by the Supreme Court only in very limited instances and that it
is not likely that any further review will be granted.
BATU HIJAU
As discussed in Note 5 of Item 1, in July 1996, the Company and Sumitomo
Corporation ("Sumitomo") entered into a definitive partnership agreement to
develop and operate the Batu Hijau copper/gold deposit in Indonesia.
The estimated cost for development of the open pit mine, mill, and
infrastructure including employee housing, a port, electrical generation
facilities, interest during construction, cost escalations and working capital
is expected to approximate $1.9 billion. Financing was signed in July 1997,
which subject to satisfaction of certain conditions, will fund $1.0 billion of
the project costs, with the remaining $0.9 billion to be provided by the Company
and Sumitomo. The financing, which is guaranteed by the Company and Sumitomo,
56.25% and 43.75%, respectively, until project completion tests are met, will be
non-recourse to the Company thereafter, (except with respect to a $125 million
support facility that the Company and Sumitomo have agreed to provide) includes
commitments from three export credit agencies with participation of commercial
banks. Repayment will be amortized over a 13-year period beginning six months
after project completion, and bears interest at blended fixed and floating
rates.
Under the terms of the agreement with Sumitomo, the Company contributed its
interest in the company that owns the project and Sumitomo will contribute an
agreed upon amount of cash, expected to be approximately $238 million, of which
$164 million has been contributed as of June 30, 1997. Under this agreement,
the Company will retain a 45% interest in the company that owns the project,
Sumitomo holds a 35% interest, and an unrelated Indonesian company owns the
remaining 20%. The source of the Company's future contributions will be
operating cash flow, bank credit lines or other third party financing as
needed.
As a result of the contemplated ownership structure, the Company began
accounting for its investment in Batu Hijau as an equity investment effective
July 1996. The Company's investment at June 30, 1997, which is included in
other long-term assets, was $45.9 million.
FORWARD-LOOKING STATEMENTS
The foregoing discussion and analysis, as well as certain of the notes to
the consolidated financial statements, contain "forward-looking statements"
within the meaning of Section 27A of the Securities Exchange Act of 1934, as
amended. Such statements include, but are not limited to, (i) estimates of
27
<PAGE> 28
future gold production for specific operations, (ii) estimates of future
production costs for specific operations, (iii) expectations as to the funding
of future capital expenditures and other cash needs, (iv) statements as to the
projected development of certain ore deposits, including estimates of
development and other capital costs and financing plans with respect thereto,
(v) estimates of future costs and other liabilities for certain environmental
matters and (vi) statements as to the likelihood of the Peruvian Supreme Court
granting review in the litigation relating to Minera Yanacocha. These
forward-looking statements are subject to risks, uncertainties and other
factors that could cause actual results to differ materially from the
forward-looking statements or the results projected or implied by the
forward-looking statements.
Future gold production could be affected by, among other things, the price
of gold, risks and hazards associated with mining operations, variances in ore
grade and metallurgical and other characteristics from assumptions contained in
mining plans, labor disputes and acts of God.
Future production costs could be affected by a number of factors,
including, but not limited to, unanticipated geological configurations or other
geological or grade problems, metallurgical and other processing problems, the
occurrence of inclement or hazardous weather conditions or other unusual
operating conditions, the failure of equipment, processes or facilities to
operate in accordance with specifications or expectations, labor disputes,
accidents and changes in U.S. or foreign laws or regulations or the
interpretation, enforcement or implementation thereof.
The amount and timing of future capital expenditures could be influenced by
a number of factors, including the timing of receipt of necessary permits and
other governmental approvals, the failure of equipment, processes or facilities
to operate in accordance with specifications and expectations, labor disputes
and unanticipated changes in mine plans. The funding of such expenditures and
other cash needs will be affected by the level of cash flow generated by the
Company and the ability of the Company to otherwise finance such expenditures,
which in turn could be affected by general U.S. and international economic and
political conditions, political and economic conditions in the country in which
the expenditure is being made, as well as financial market conditions.
The development of certain ore deposits could be affected by, among other
things, labor disputes, delays in the receipt of or failure to receive
necessary governmental permits or approvals, changes in U.S. or foreign laws or
regulations or the interpretation, enforcement or implementation thereof, the
failure of any of the Company's joint venture partners to perform as agreed
under the relevant agreements or any termination of any such agreements,
unanticipated ground and water conditions, the failure of equipment, processes
or facilities to operate in accordance with specifications or expectations, or
delays in the receipt of or the ability to obtain any necessary financing.
Future environmental costs and liabilities could be impacted by changes in
U.S. or foreign laws or regulations or the interpretation, enforcement or
implementation thereof and other factors beyond the control of the Company.
The statement with respect to the outcome of the pending litigation in Peru
is subject to the risk that, notwithstanding the opinion of Peruvian counsel,
the Peruvian Supreme Court may grant review of the decision of the Superior
Court.
28
<PAGE> 29
For a more detailed discussion of the foregoing risks and uncertainties as
well as other risks and uncertainties affecting the Company and its operations,
see "Forward-Looking Statements" contained in Item 1 of the Company's and Santa
Fe's Annual Reports on Form 10-K for the fiscal year ended December 31, 1996,
as well as other filings made by the Company from time to time with the
Securities and Exchange Commission. Many of these factors are beyond the
Company's ability to control or predict. Readers are cautioned not to put
undue reliance on forward-looking statements. The Company disclaims any intent
or obligation to update publicly any forward-looking statements set forth in
this discussion, whether as a result of new information, future events or
otherwise.
29
<PAGE> 30
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
Registrant's annual meeting of stockholders was held on May 5, 1997.
All twelve directors nominated to serve as directors of Registrant were
elected. The vote was as follows:
<TABLE>
<CAPTION>
Broker
Nominee For Withheld Abstentions Non-Votes
- ------- --- -------- ----------- ---------
<S> <C> <C> <C> <C>
R.I.J. Agnew 105,660,656 20,930 0 0
J. P. Bolduc 105,660,406 21,180 0 0
R. C. Cambre 105,661,956 19,630 0 0
J. P. Flannery 105,656,556 25,030 0 0
L. I. Higdon 105,660,406 21,180 0 0
T. A. Holmes 105,660,656 20,930 0 0
R. A. Plumbridge 105,660,756 20,830 0 0
R. H. Quenon 105,660,656 20,930 0 0
M. A. Qureshi 105,655,906 25,680 0 0
M. K. Reilly 105,661,756 19,830 0 0
J. V. Taranik 105,660,606 20,980 0 0
W.I.M. Turner, Jr. 105,661,706 19,880 0 0
</TABLE>
The stockholders approved the issuance to Newmont Mining Corporation
("Newmont Mining") of shares of the Registrant's common stock in exchange for
all of Santa Fe Pacific Gold Corporation's shares of common stock acquired by
Newmont Mining upon consummation of the merger by Newmont Mining of Santa Fe
Pacific Gold Corporation in a transaction known as the "Contribution
Transaction". The vote was as follows:
<TABLE>
<S> <C>
For: 103,831,537
Against: 35,999
Abstentions: 175,262
Broker non-votes: 5,895,890
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10 - Amendment No. 1, dated June 24, 1997, to Agreement dated October 15,
1993, effective November 1, 1993 among the Company, NMC and
Ronald C. Cambre.
11 - Statement re Computation of Per Share Earnings.
12 - Statement re Computation of Ratio of Earnings to Fixed Charges.
27 - Financial Data Schedule.
(b) Reports filed on Form 8-K during the quarter ended June 30, 1997:
No reports were filed on Form 8-K during the quarter ended June 30, 1997.
30
<PAGE> 31
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 GOLD COMPANY
(Registrant)
Date: August 13, 1997 /s/ WAYNE W. MURDY
--------------------------------
Wayne W. Murdy
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: August 13, 1997 /s/ LELAND W. KRUGERUD
--------------------------------
Leland W. Krugerud
Vice President, Accounting and
Information Systems
(Principal Accounting Officer)
31
<PAGE> 32
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Exhibit 10 - Amendment No. 1, dated June 24, 1997, to Agreement
dated October 15, 1993, effective November 1, 1993
among the Company, NMC and Ronald C. Cambre. 33-34
Exhibit 11 - Statement re Computation of Per Share Earnings 35-36
Exhibit 12 - Statement re Computation of Ratio of Earnings
Fixed Charges 37
Exhibit 27 - Financial Data Schedule 38
</TABLE>
<PAGE> 1
EXHIBIT 10
AMENDMENT No. 1 to the Agreement dated and entered into on the 15th
day of October, 1993 (the "Agreement") between NEWMONT MINING CORPORATION, a
Delaware corporation and NEWMONT GOLD COMPANY, a Delaware corporation
(collectively known herein as "Newmont") and RONALD C. CAMBRE (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Executive remains in the employ of Newmont and
the Executive and Newmont have agreed to this Amendment No. 1.
NOW, THEREFORE, in consideration of the premises and mutual
agreements of the parties herein contained, it is agreed:
(1). Paragraph 2(a) of the Agreement is hereby revised to read in
its entirety as follows:
(a) Newmont will employ Executive for a period
commencing on the Effective Date and ending either two years after
Newmont delivers written notice to Executive of Newmont's intention to
terminate this Agreement or the Executive's 62nd birthday, whichever
is earlier ("Term of Employment"); provided, however, that commencing
on January 1, 1998, and each January 1 thereafter, the term of this
Agreement shall automatically be extended for one additional year
unless, not later than September 30 of the preceding year, the
Compensation Committee of Newmont shall have given written notice to
the Executive that it does not wish to extend this Agreement.
(2). Paragraph 4(vii) of the Agreement is hereby revised to read in
its entirety as follows:
(vii) In addition to the pension benefits to be
provided Executive under the Pension Plan of Newmont Gold Company and
the Salaried Retirement Savings Plan of Newmont Gold Company, and in
lieu of any benefits to Executive pursuant to the Pension Equalization
Plan of Newmont, Executive shall receive in a lump- sum amount a
non-qualified retirement benefit, payable within one year of
Executive's termination of employment, equal to the following dollar
amounts depending upon Executive's retirement date:
<TABLE>
<CAPTION>
<S> <C>
Retirement
Date Lump Sum Amount
---------- ---------------
10/1/97 $1,555,000
10/1/98 $2,003,560
10/1/99 $2,500,163
10/1/00 $3,048,580
10/1/01 $3,511,418
10/1/02 $3,991,761
10/1/03 $4,488,424
</TABLE>
<PAGE> 2
The actual lump-sum amount that the Executive will receive
shall be determined by a straight-line interpolation method depending upon the
month in which the Executive retires. For instance, if the Executive retires
on May 5, 1998, he shall receive the lump-sum amount for 10/1/97 ($1,555,000)
plus the difference between the lump-sum amount for 10/1/98 ($2,003,560) and
the lump-sum amount for 10/1/97 ($1,555,000) divided by twelve ($37,380) and
multiplied by the number of full months that elapsed between the Executive's
retirement date and the previous October 1 (7 months x $37,380 = $261,660).
Therefore, if the Executive retires on May 5, 1998 he would receive $1,816,660
($1,555,000 + $261,660).
IN WITNESS WHEREOF, Newmont and the Executive have caused this
Amendment No. 1 to the Agreement to be executed as of the 24th day of June,
1997.
NEWMONT MINING CORPORATION
By: /s/ Timothy J. Schmitt Date: 6/24/97
-------------------------- -------------
Timothy J. Schmitt
NEWMONT GOLD COMPANY
By: /s/ Timothy J. Schmitt Date: 6/24/97
-------------------------- -------------
Timothy J. Schmitt
/s/ RONALD C. CAMBRE Date: 6/24/97
------------------------------ -------------
RONALD C. CAMBRE
<PAGE> 1
EXHIBIT 11
Page 1 of 2
NEWMONT GOLD COMPANY AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(In thousands, except per share)
PRIMARY EARNINGS PER SHARE CALCULATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
-------- -------- -------- ------
<S> <C> <C> <C> <C>
INCOME DATA:
Net income (loss) applicable
to common shares $(68,979) $ 25,706 $(14,289) $ 42,067
======== ======== ======== ========
COMMON AND COMMON EQUIVALENT SHARES:
Weighted average common
shares 166,540 166,373 166,514 165,576
Equivalent common shares
from stock options - 432 - 405
-------- -------- -------- --------
Common and common equivalent
shares 166,540 166,805 166,514 165,981
======== ======== ======== ========
EARNINGS PER COMMON SHARE:
Net income (loss) per common
and common equivalent shares $ (0.41) $ 0.15 $ (0.09) $ 0.25
======== ======== ======== ========
</TABLE>
<PAGE> 2
EXHIBIT 11
Page 2 of 2
NEWMONT GOLD COMPANY AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(In thousands, except per share)
FULLY DILUTED EARNINGS PER SHARE CALCULATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
-------- -------- -------- ------
<S> <C> <C> <C> <C>
INCOME DATA:
Net income (loss) applicable
to common shares $(68,979) $ 25,706 $(14,289) $ 42,067
======== ======== ======== ========
COMMON AND COMMON EQUIVALENT SHARES:
Weighted average common
shares 166,540 166,373 166,514 165,576
Equivalent common shares
from stock options - 432 - 405
-------- -------- -------- --------
Common and common equivalent
shares 166,540 166,805 166,514 165,981
======== ======== ======== ========
EARNINGS PER COMMON SHARE:
Net income (loss) per common
and common equivalent shares $ (0.41) $ 0.15 $ (0.09) $ 0.25
======== ======== ======== ========
</TABLE>
<PAGE> 1
EXHIBIT 12
NEWMONT GOLD COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Amounts in thousands except ratios)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1997
----------------
<S> <C>
Earnings:
Loss before income taxes $ (29,677)
Adjustments:
Net interest expense (1) 38,941
Amortization of capitalized interest 1,439
Portion of rental expense representative
of interest 1,625
Minority interest 32,024
Undistributed loss of less than 50%
owned entities 3,421
---------
$ 47,773
=========
Fixed Charges:
Net interest expense (1) $ 38,941
Capitalized interest 5,980
Portion of rental expense representative
of interest 1,625
---------
$ 46,546
=========
Ratio of earnings to fixed charges 1.03
=========
</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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<CASH> 114,160
<SECURITIES> 13,927
<RECEIVABLES> 30,487
<ALLOWANCES> 0
<INVENTORY> 397,763
<CURRENT-ASSETS> 645,763
<PP&E> 3,796,746
<DEPRECIATION> 1,219,478
<TOTAL-ASSETS> 3,471,298
<CURRENT-LIABILITIES> 370,933
<BONDS> 1,139,044
0
0
<COMMON> 759,216
<OTHER-SE> 864,364
<TOTAL-LIABILITY-AND-EQUITY> 3,471,298
<SALES> 776,815
<TOTAL-REVENUES> 816,698
<CGS> 395,747
<TOTAL-COSTS> 809,876
<OTHER-EXPENSES> 248,559
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38,941
<INCOME-PRETAX> 2,347
<INCOME-TAX> (15,388)
<INCOME-CONTINUING> (14,289)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,289)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> (0.09)
</TABLE>
