Market Overview

Newmont Announces Second Quarter 2018 Results

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Newmont Mining Corporation (NYSE:NEM) (Newmont or the Company)
announced second quarter 2018 results.

  • Net income: Delivered GAAP net income from continuing
    operations attributable to stockholders of $274 million or $0.51 per
    diluted share; delivered adjusted net income1 of $144
    million or $0.26 per diluted share, down 43 percent compared to
    the prior year quarter
  • EBITDA: Generated $545 million in adjusted EBITDA2,
    down 22 percent from the prior year quarter
  • Cash flow: Reported consolidated cash flow from continuing
    operations of $401 million and free cash flow3 of $143
    million
  • Gold costs applicable to sales (CAS)4: Reported
    CAS of $751 per ounce, with no change to the Company's full year
    guidance
  • Gold all-in sustaining costs (AISC)5: Reported
    AISC of $1,024 per ounce, with no change to the Company's full year
    guidance
  • Attributable gold production: Produced 1.16 million ounces of
    gold, in line with the Company's full year guidance
  • Portfolio improvements: Agreement to acquire 50 percent
    ownership interest in Galore Creek from NovaGold, partnering with
    Teck; completed the Twin Underground and Northwest Exodus projects in
    Nevada; advanced the Akyem Underground project to prefeasibility study
    in Africa; welcomed Sumitomo Corporation as a new five percent partner
    at Yanacocha in Peru; and divested royalty portfolio forming a
    strategic partnership with Maverix Metals
  • Financial strength: Ended the quarter with $3.1 billion cash on
    hand and net debt under $1.0 billion; an industry-leading balance
    sheet with investment-grade credit profile; and a quarterly dividend
    declared of $0.14 per share, an increase of 87 percent over the prior
    year quarter
  • Outlook: Maintained corporate-level production, unit cost and
    capital outlook for 2018

"Newmont delivered $545 million in adjusted EBITDA and $143 million in
free cash flow in the second quarter, as strong operational performance
helped offset the impacts of geotechnical challenges and back-half
weighted results," said Gary J. Goldberg, President and Chief Executive
Officer. "We continued to add lower cost production by completing our
Twin Underground and Northwest Exodus projects safely, on budget and
ahead of schedule. And we invested in future value-creation by forging a
partnership with Teck to advance prefeasibility studies on Galore Creek
in British Colombia, one of the world's largest undeveloped copper-gold
deposits, and with Sumitomo to develop Yanacocha Sulfides in Peru."

Second Quarter 2018 Summary Results

Net income from continuing operations attributable to Newmont
stockholders of $274 million or $0.51 per diluted share, an increase of
$84 million from the prior year quarter primarily due to lower income
taxes, a gain from the sale of the Company's royalty portfolio in June
2018 and higher average realized prices, partially offset by lower
production at CC&V, Boddington, Akyem and Twin Creeks.

Adjusted net income was $144 million or $0.26 per diluted share,
compared to $248 million or $0.46 per diluted share in the prior
year quarter resulting from lower production. Primary adjustments to net
income include $0.18 per share related to the sale of the Company's
royalty portfolio and $0.08 per share of net tax adjustments primarily
related to valuation allowances.

Revenue decreased 11 percent to $1,662 million for the quarter
primarily due to lower production, partially offset by higher average
realized gold prices.

Average realized price6 for gold was $1,292, an
improvement of $42 per ounce over the prior year quarter; average
realized price for copper was $2.99 per pound, an improvement of $0.53
over the prior year quarter.

Attributable gold production decreased 14 percent to 1.16 million
ounces primarily from lower grades at Carlin, Twin Creeks, Boddington
and Akyem and a build of CC&V concentrate inventory to be processed in
Nevada.

Gold CAS rose 13 percent to $751 per ounce for the quarter due to
lower production, higher stockpile and leach pad inventory adjustments,
the impact of KCGM rock falls, and higher oil prices.

Gold AISC rose 16 percent to $1,024 per ounce for the quarter on
higher CAS, sustaining capital and advanced project and exploration
expense.

Attributable copper production from Phoenix and Boddington
decreased 7 percent to 14,000 tonnes for the quarter. Copper CAS totaled
$46 million for the quarter. Copper CAS was $1.70 per pound for the
quarter due to higher volume driven allocation of costs to copper. Copper
AISC
increased 21 percent to $2.05 per pound for the quarter due to
higher unit CAS and higher sustaining capital spend.

Capital expenditures7 increased by 41 percent from the
prior year quarter to $258 million with increased investment in Quecher
Main, Subika Underground, and the Ahafo Mill expansion.

Consolidated operating cash flow from continuing operations decreased
24 percent from the prior year quarter to $401 million primarily due to
lower volumes, changes in working capital primarily due to tax payments,
and a build in inventory partially offset by collection of accounts
receivable and higher realized metal prices. Free cash flow decreased 58
percent from the prior year quarter to $143 million from lower operating
cash flow and higher investment in growth projects.

Balance sheet ended the quarter with $3.1 billion cash on hand, a
leverage ratio of 0.4x net debt to adjusted EBITDA and one of the best
credit ratings in the mining sector. The Company is committed to
maintaining an investment-grade credit profile.

Projects update

Newmont's capital-efficient project pipeline supports stable production
with improving margins and mine life. Near-term development capital
projects are presented below. Funding for Subika Underground, Ahafo Mill
Expansion, Quecher Main and Tanami Power projects has been approved and
these projects are in execution. Additional projects represent
incremental improvements to production and cost guidance. Internal rates
of return (IRR) on these projects are calculated at a $1,200 gold price.

  • Subika Underground (Africa) leverages
    existing infrastructure and an optimized approach to develop Ahafo's
    most promising underground resource. First production was achieved in
    June 2017 with commercial production expected in the fourth quarter of
    2018. The project is expected to increase average annual gold
    production by between 150,000 and 200,000 ounces per year for the
    first five years beginning in 2019 with an initial mine life of
    approximately 11 years. Capital costs for the project are estimated at
    between $160 and $200 million with expenditure of between $85 and $95
    million in 2018. The project has an IRR of more than 20 percent.
  • Ahafo Mill Expansion (Africa) is designed
    to maximize resource value by improving production margins and
    accelerating stockpile processing. The project also supports
    profitable development of Ahafo's highly prospective underground
    resources. First production is expected in the second half of 2019
    with commercial production also expected in the second half of 2019.
    The expansion is expected to increase average annual gold production
    by between 75,000 and 100,000 ounces per year for the first five years
    beginning in 2020. Capital costs for the project are estimated at
    between $140 and $180 million with expenditure of approximately $75 to
    $85 million in 2018. The project has an IRR of more than 20 percent.

Together the Ahafo expansion projects (Ahafo Mill Expansion and Subika
Underground) improve Ahafo's production to between 550,000 and 650,000
ounces per year for the first five full years of production (2020 to
2024). During this period Ahafo's CAS is expected to be between $650 and
$750 per ounce and AISC is expected to be between $800 and $900 per
ounce. This represents average production improvement of between 200,000
and 300,000 ounces at CAS improvement of between $150 and $250 per ounce
and AISC improvement of $250 to $350 per ounce, compared to 2016 actuals.

  • Quecher Main (South America) will add
    oxide production at Yanacocha, leverage existing infrastructure and
    enable potential future growth at Yanacocha. First production is
    expected in late 2018 with commercial production in the second half of
    2019. Quecher Main extends the life of the Yanacocha operation to 2027
    with average annual gold production of approximately 200,000 ounces
    per year between 2020 and 2025 (100 percent basis). During the same
    period incremental CAS is expected to be between $750 and $850 per
    ounce and AISC between $900 and $1,000 per ounce. Capital costs for
    the project are expected to be between $250 and $300 million with
    expenditure of $80 to $90 million in 2018. The project IRR is expected
    to be greater than 10 percent.
  • Tanami Power (Australia) will lower
    Tanami power costs by approximately 20 percent beginning in 2019,
    mitigate fuel supply risk and reduce carbon emissions by 20 percent.
    The project includes a 450 kilometer natural gas pipeline to be
    constructed connecting the Tanami site to the Amadeus Gas Pipeline,
    and construction and operation of two on-site power stations. The gas
    supply, gas transmission and power purchase agreements are for a 10
    year term with options to extend. The project is expected to result in
    net cash savings of approximately $34 per ounce beginning in 2019.
    Capital costs are estimated at between $225 and $275 million with
    annual cash lease payments over a 10 year term beginning in 2019 with
    approximately $10 million of owner's costs paid in 2018. The project
    IRR is expected to be greater than 50 percent at $0.75 AUD.

Outlook

Newmont's outlook reflects stable gold production and ongoing investment
in its operating assets and most promising growth prospects. Newmont
does not include development projects that have not yet been funded or
reached execution stage in its outlook, which represents upside to
production and cost guidance.

Attributable gold production remains unchanged at between 4.9 and
5.4 million ounces in 2018 and 2019. Longer term production is expected
to remain stable at between 4.6 and 5.1 million ounces per year through
2022 excluding development projects which have yet to be approved.

  • North America production remains unchanged at between 2.0 and 2.2
    million ounces in 2018. Production declines slightly in 2019 to
    between 1.8 and 2.0 million ounces due to planned stripping at Carlin
    and then increases to between 1.9 and 2.1 million ounces in 2020 due
    to higher grades at Twin Creeks, Cripple Creek & Victor and Long
    Canyon. The Company continues to pursue profitable growth
    opportunities at Carlin and Long Canyon.
  • South America production remains unchanged at between 615,000 and
    675,000 ounces in 2018. Production is expected to be between 590,000
    and 690,000 ounces in 2019 with the addition of Quecher Main and
    between 475,000 and 575,000 ounces per year in 2020 as Yanacocha
    laybacks are mined out and Merian transitions from saprolite to hard
    rock. The Company continues to advance near-mine growth opportunities
    at Merian and both oxide and sulfide potential at Yanacocha.
  • Australia production decreases to between 1.4 and 1.6 million ounces
    in 2018 driven by the East wall slip at KCGM. Production in 2019 and
    2020 may be impacted by the KCGM rock falls and life of mine plans are
    being assessed. The Company continues to advance studies for a second
    expansion at Tanami.
  • Africa production remains unchanged at between 815,000 and 875,000
    ounces in 2018. Production is expected to be between 1.1 and 1.2
    million ounces in 2019 as the Ahafo Mill expansion reaches commercial
    production and between 880,000 and 980,000 ounces in 2020 as both
    Ahafo and Akyem reach lower open pit grade. The company continues to
    advance the Ahafo North project and other prospective surface and
    underground opportunities.

Gold cost outlook CAS remains unchanged at between $700
and $750 per ounce in 2018. CAS is expected to be between $620 and $720
per ounce for 2019 and between $650 and $750 per ounce longer term
through 2022. AISC remains unchanged at between $965 and $1,025 per
ounce in 2018. AISC is expected to be between $870 and $970 per ounce in
2019 and longer-term through 2022. Further Full Potential savings and
profitable ounces from projects that are not yet approved represent
additional upside not currently captured in guidance.

  • North America CAS remains unchanged at between $730 and $780 per ounce
    in 2018. CAS is expected to be between $680 and $780 per ounce in 2019
    and between $655 and $755 per ounce in 2020 on higher production at
    Twin Creeks, Cripple Creek & Victor and Long Canyon. AISC has improved
    to be between $920 and $955 per ounce in 2018 on improved unit CAS.
    AISC is expected to be between $870 and $970 per ounce in 2019 and
    between $825 and $925 in 2020.
  • South America CAS remains unchanged at between $675 and $735 per ounce
    in 2018. CAS is expected to be between $560 and $660 per ounce in 2019
    as Quecher Main reaches commercial production and be between $690 and
    $790 per ounce in 2020. AISC improved to be between $925 and $1,025
    per ounce in 2018 on lower unit CAS. AISC is expected to be between
    $810 and $910 per ounce in 2019 on improved unit CAS and be between
    $970 and $1,070 per ounce in 2020.
  • Australia CAS increases to between $695 and $745 per ounce in 2018
    driven by the East wall slip at KCGM. CAS and AISC in 2019 and 2020
    may be impacted by the KCGM rock falls and life of mine plans are
    being assessed.
  • Africa CAS increases to between $715 and $765 per ounce in 2018 due to
    higher inventory costs from lower grade mined and higher surface
    mining costs. CAS is expected to be between $520 and $620 per ounce in
    2019 and between $610 and $710 per ounce in 2020. AISC increases to
    between $880 and $940 per ounce in 2018. AISC is expected to be
    between $700 and $800 per ounce in 2019 as the Ahafo Mill expansion
    reaches commercial production and between $775 and $875 per ounce in
    2020.

Copper – Attributable production remains unchanged at
between 40,000 and 60,000 tonnes in 2018 and 2019, increasing to between
45,000 and 65,000 tonnes longer term through 2022 as Phoenix moves into
higher copper zones. CAS remains unchanged at between $1.65 and $1.85
per pound in 2018. CAS is expected to be between $1.80 and $2.20 per
pound in 2019 before falling to between $1.40 and $1.80 per pound longer
term as Phoenix moves into higher copper zones. AISC remains unchanged
at between $2.00 and $2.20 per pound in 2018. AISC is expected to be
between $2.25 and $2.55 per pound in 2019 and between $1.80 and $2.10
per pound longer term.

Capital – Total capital remains unchanged at between $1,200 and
$1,300 million for 2018 and is expected to remain between $730 and $830
million for 2019. Primary development capital includes expenditure on
the Ahafo Mill and Subika Underground expansions in Africa, Twin
Underground in North America and Quecher Main in South America and
Tanami Power Project. Sustaining capital remains unchanged at between
$600 and $700 million in 2018, between $600 and $700 million for 2019
and between $550 and $650 million per year longer term to cover
infrastructure, equipment and ongoing mine development.

Consolidated expense outlook – Interest expense for 2018 remains
unchanged at between $175 and $215 million and investment in exploration
and advanced projects remains unchanged at between $350 and $400
million. 2018 outlook for general & administrative costs increases to
between $225 and $250 million due primarily to additional investments in
the Company's cyber security and leadership development programs.
Guidance for depreciation and amortization remains unchanged at between
$1,225 and $1,325 million.

Assumptions and sensitivities – Newmont's outlook assumes $1,200
per ounce gold price, $2.50 per pound copper price, $0.75 USD/AUD
exchange rate and $55 per barrel WTI oil price. A $100 per ounce
increase in gold price would deliver an expected $335 million
improvement in attributable free cash flow. Similarly, a $10 per barrel
reduction in the price of oil and a $0.05 favorable change in the
Australian dollar would deliver an expected $25 million and $45 million
improvement in attributable free cash flow, respectively. These
estimates exclude current hedge programs; please refer to Newmont's Form
10-Q which was filed with the SEC on July 26, 2018 for further
information on hedging positions.

_______________________

1 Non-GAAP measure. See end of this release for
reconciliation to Net income (loss) attributable to Newmont stockholders.

2
Non-GAAP measure. See end of this release for reconciliation to Net
income (loss) attributable to Newmont stockholders.

3
Non-GAAP measure. See end of this release for reconciliation to Net
cash provided by operating activities.

4 Non-GAAP
measure. See end of this release for reconciliation to Costs applicable
to sales.

5 Non-GAAP measure. See end of this
release for reconciliation to Costs applicable to sales.

6
Non-GAAP measure. See end of this release for reconciliation
to Sales.

7 Capital expenditures refers to
Additions to property plant and mine development from the Condensed
Consolidated Statements of Cash Flows.

                   
2018 Outlooka
Consolidated
All-in Consolidated
Consolidated Attributable Consolidated Sustaining Total Capital
Production Production CAS Costsb Expenditures
      (Koz, Kt)     (Koz, Kt)     ($/oz, $/lb)     ($/oz, $/lb)     (NYSE:M)
North America
Carlin 950 1,015 950 1,015 775 825 980 1,040 155 190
Phoenixc 210 230 210 230 810 860 990 1,050 20 30
Twin Creeksd 315 345 315 345 700 750 875 925 80 100
CC&V 345 395 345 395 670 725 800 860 30 40
Long Canyon 130 170 130 170 510 560 605 655 10 20
Other North America                                             10 20
Total 2,010 2,170 2,010 2,170 730 780 920 995 300 380
 
South America
Yanacochae 470 545 240 280 885 925 1,125 1,175 110 140
Meriane 485 540 365 405 455 495 580 630 55 95
Other South America                                                  
Total 970 1,070 615 675 675 735 925 1,025 170 230
 
Australia
Boddington 665 715 665 715 820 870 950 1,000 60 75
Tanami 440 515 440 515 535 605 705 775 300i 380i
Kalgoorlief 280 330 280 330 715 765 825 875 20 30
Other Australia                                             5 15
Total 1,420 1,560 1,420 1,560 695 745 850 910 400i 480i
 
Africa
Ahafo 435 465 435 465 780 835 900 980 195 240
Akyem 380 410 380 410 640 680 765 815 30 40
Other Africa                                                  
Total 815 875 815 875 715 765 880 940 225 275
 
Corporate/Other                                             10 15
Total Goldg     5,300 5,800     4,900 5,400     700 750     965 1,025     1,200 1,300
 
Phoenix 10 20 10 20 1.50 1.70 1.85 2.05
Boddington     30 40     30 40     1.75 1.95     2.05 2.25          
Total Copper     40 60     40 60     1.65 1.85     2.00 2.20          
 
2018 Consolidated Expense Outlookh  
General & Administrative     $ 225 $ 250
Interest Expense $ 175 $ 215
Depreciation and Amortization $ 1,225 $ 1,325
Advanced Projects & Exploration $ 350 $ 400
Sustaining Capital $ 600 $ 700
Tax Ratej       28%   34%

a

 

2018 Outlook in the table above are considered "forward-looking
statements" and are based upon certain assumptions, including, but
not limited to, metal prices, oil prices, certain exchange rates
and other assumptions. For example, 2018 Outlook assumes $1,200/oz
Au, $2.50/lb Cu, $0.75 USD/AUD exchange rate and $55/barrel WTI;
AISC and CAS estimates do not include inflation, for the remainder
of the year. Production, CAS, AISC and capital estimates exclude
projects that have not yet been approved. The potential impact on
inventory valuation as a result of lower prices, input costs, and
project decisions are not included as part of this Outlook. Such
assumptions may prove to be incorrect and actual results may
differ materially from those anticipated. See cautionary note at
the end of the release
.

b

All-in sustaining costs or AISC as used in the Company's
Outlook is a non-GAAP metric defined as the sum of costs
applicable to sales (including all direct and indirect costs
related to current production incurred to execute on the current
mine plan), reclamation costs (including operating accretion and
amortization of asset retirement costs), G&A, exploration expense,
advanced projects and R&D, treatment and refining costs, other
expense, net of one-time adjustments and sustaining capital. See
reconciliation at the end of this release.

c

Includes Lone Tree operations.

d

Includes TRJV operations shown on a pro-rata basis with a 25%
ownership interest.

e

Consolidated production for Yanacocha and Merian is presented
on a total production basis for the mine site; attributable
production represents a 51.35% interest for Yanacocha and a 75%
interest for Merian
.

f

Both consolidated and attributable production are shown on a
pro-rata basis with a 50% ownership for Kalgoorlie.

g

Production outlook does not include equity production from
stakes in TMAC (28.71%) or La Zanja (46.94%)
.

h

Consolidated expense outlook is adjusted to exclude
extraordinary items. For example, the tax rate outlook above is a
consolidated adjusted rate, which assumes the exclusion of certain
tax valuation allowance adjustments.

i

Includes $225-$275M for a capital lease related to the Tanami
Power Project paid over a 10 year term beginning in 2019.

j

Assuming average prices of $1,300 per ounce for gold and $2.70
per pound for copper and achievement of current production and
sales volumes and cost estimates, we estimate our consolidated
adjusted effective tax rate related to continuing operations for
2018 will be between 28-34%.

 

                     
Three Months Ended June 30, Six Months Ended June 30,
Operating Results     2018     2017     % Change     2018     2017     % Change  
Attributable Sales (koz, kt)
Attributable gold ounces sold 1,147 1,350 (15 ) % 2,378 2,579 (8 ) %
Attributable copper tonnes sold 13 14 (7 ) % 25 26 (4 ) %
 
Average Realized Price ($/oz, $/lb)
Average realized gold price $ 1,292 $ 1,250 3 % $ 1,310 $ 1,235 6 %
Average realized copper price     $ 2.99     $ 2.46     22   %   $ 2.93     $ 2.56     14   %
 
Attributable Production (koz, kt)
North America 430 578 (26 ) % 920 1,082 (15 ) %
South America 141 153 (8 ) % 285 303 (6 ) %
Australia 391 401 (2 ) % 757 761 (1 ) %
Africa       200       220     (9 ) %     409       440     (7 ) %
Total Gold       1,162       1,352     (14 ) %     2,371       2,586     (8 ) %
 
North America 4 5 (20 ) % 7 9 (22 ) %
Australia       10       10       %     19       19     -   %
Total Copper       14       15     (7 ) %     26       28     (7 ) %
 
CAS Consolidated ($/oz, $/lb)
North America $ 802 $ 628 28 % $ 782 $ 693 13 %
South America $ 711 $ 825 (14 ) % $ 747 $ 736 1 %
Australia $ 710 $ 652 9 % $ 709 $ 651 9 %
Africa     $ 762     $ 605     26   %   $ 754     $ 615     23   %
Total Gold     $ 751     $ 664     13   %   $ 750     $ 677     11   %
Total Gold (by-product)     $ 722     $ 641     13   %   $ 724     $ 654     11   %
 
North America $ 2.00 $ 1.60 25 % $ 1.93 $ 1.70 14 %
Australia     $ 1.59     $ 1.27     25   %   $ 1.63     $ 1.29     26   %
Total Copper     $ 1.70     $ 1.38     23   %   $ 1.72     $ 1.43     20   %
 
AISC Consolidated ($/oz, $/lb)
North America $ 1,056 $ 797 32 % $ 996 $ 869 15 %
South America $ 1,005 $ 1,071 (6 ) % $ 1,002 $ 958 5 %
Australia $ 851 $ 782 9 % $ 853 $ 779 9 %
Africa     $ 942     $ 795     18   %   $ 923     $ 773     19   %
Total Gold     $ 1,024     $ 883     16   %   $ 998     $ 891     12   %
Total Gold (by-product)     $ 1,002     $ 868     15   %   $ 979     $ 874     12   %
 
North America $ 2.57 $ 2.00 29 % $ 2.35 $ 2.05 15 %
Australia     $ 1.87     $ 1.55     21   %   $ 1.95     $ 1.55     26   %
Total Copper     $ 2.05     $ 1.69     21   %   $ 2.06     $ 1.72     20   %
 

               

NEWMONT MINING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in millions except per share)

 
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
 
Sales $ 1,662 $ 1,875 $ 3,479 $ 3,565
 
Costs and expenses
Costs applicable to sales (1) 965 999 1,994 1,956
Depreciation and amortization 279 310 580 610
Reclamation and remediation 37 43 65 72
Exploration 54 51 94 87
Advanced projects, research and development 36 32 70 58
General and administrative 63 58 122 113
Other expense, net   13     14     24     31  
  1,447     1,507     2,949     2,927  
Other income (expense)
Other income, net 139 31 160 22
Interest expense, net of capitalized interest   (49 )   (64 )   (102 )   (131 )
  90     (33 )   58     (109 )
Income (loss) before income and mining tax and other items 305 335 588 529
Income and mining tax benefit (expense) (18 ) (166 ) (123 ) (277 )
Equity income (loss) of affiliates   (7 )   (3 )   (16 )   (5 )
Income (loss) from continuing operations 280 166 449 247
Income (loss) from discontinued operations   18     (15 )   40     (38 )
Net income (loss) 298 151 489 209
Net loss (income) attributable to noncontrolling interests   (6 )   24     (5 )   13  
Net income (loss) attributable to Newmont stockholders $ 292   $ 175   $ 484   $ 222  
 
Net income (loss) attributable to Newmont stockholders:
Continuing operations $ 274 $ 190 $ 444 $ 260
Discontinued operations   18     (15 )   40     (38 )
$ 292   $ 175   $ 484   $ 222  
Income (loss) per common share
Basic:
Continuing operations $ 0.52 $ 0.36 $ 0.84 $ 0.49
Discontinued operations   0.03     (0.03 )   0.07     (0.07 )
$ 0.55   $ 0.33   $ 0.91   $ 0.42  
Diluted:
Continuing operations $ 0.51 $ 0.36 $ 0.83 $ 0.49
Discontinued operations   0.03     (0.03 )   0.07     (0.07 )
$ 0.54   $ 0.33   $ 0.90   $ 0.42  
 
Cash dividends declared per common share $ 0.14 $ 0.05 $ 0.28 $ 0.10

(1) Excludes Depreciation and amortization and Reclamation
and remediation
.

               
 

NEWMONT MINING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)

 
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Operating activities:
Net income (loss) $ 298 $ 151 $ 489 $ 209
Adjustments:
Depreciation and amortization 279 310 580 610
Stock-based compensation 19 19 38 35
Reclamation and remediation 35 40 61 68
Loss (income) from discontinued operations (18 ) 15 (40 ) 38
Deferred income taxes (29 ) 19 (19 ) 76
Gain on asset and investment sales, net (100 ) (14 ) (99 ) (16 )
Write-downs of inventory and stockpiles and ore on leach pads 76 49 158 92
Other operating adjustments 20 9 58
Net change in operating assets and liabilities   (159 )   (84 )   (510 )   (268 )
Net cash provided by (used in) operating activities of continuing
operations
401 525 667 902
Net cash provided by (used in) operating activities of discontinued
operations (1)
  (2 )   (3 )   (5 )   (9 )
Net cash provided by (used in) operating activities   399     522     662     893  
Investing activities:
Additions to property, plant and mine development (258 ) (183 ) (489 ) (363 )
Acquisitions, net (39 ) (39 )
Proceeds from sales of investments 14 15 19
Purchases of investments (113 ) (6 ) (113 )
Other   2     14     2     17  
Net cash provided by (used in) investing activities $ (281 ) $ (282 )   (517 )   (440 )
 
Financing activities:
Dividends paid to common stockholders $ (74 ) $ (27 ) $ (150 ) $ (54 )
Repurchase of common stock (6 ) (70 )
Distributions to noncontrolling interests (38 ) (48 ) (69 ) (80 )
Funding from noncontrolling interests 20 25 52 46
Proceeds from sale of noncontrolling interests 48 48
Payments for withholding of employee taxes related to stock-based
compensation
(39 ) (13 )
Other   (2 )   (5 )   (3 )   (6 )
Net cash provided by (used in) financing activities   (52 )   (55 )   (231 )   (107 )
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
  (2 )   1     (2 )   2  
Net change in cash, cash equivalents and restricted cash 64 186 (88 ) 348
Cash, cash equivalents and restricted cash at beginning of period   3,146     2,944     3,298     2,782  
Cash, cash equivalents and restricted cash at end of period $ 3,210   $ 3,130   $ 3,210   $ 3,130  
 
 
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents $ 3,127 $ 3,105 $ 3,127 $ 3,105
Restricted cash included in Other current assets 1 2 1 2
Restricted cash included in Other noncurrent assets   82     23     82     23  
Total cash, cash equivalents and restricted cash $ 3,210   $ 3,130   $ 3,210   $ 3,130  
(1)  

Net cash provided by (used in) operating activities of
discontinued operations includes
$(2), $(3), $(5) and $(6)
related to the Holt royalty obligation and $-, $-, $- and $(3)
related to closing costs for the sale of Batu Hijau, all of which
were paid out of Cash and cash equivalents held for use for
the three and six months ended June 30, 2018 and 2017,
respectively.

 

       

NEWMONT MINING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in millions)

 
At June 30, At December 31,
2018 2017
ASSETS
Cash and cash equivalents $ 3,127 $ 3,259
Trade receivables 133 124
Other accounts receivables 101 113
Investments 56 62
Inventories 697 679
Stockpiles and ore on leach pads 711 676
Other current assets   142     153  
Current assets 4,967 5,066
Property, plant and mine development, net 12,351 12,338
Investments 353 280
Stockpiles and ore on leach pads 1,837 1,848
Deferred income tax assets 537 549
Other non-current assets   610     565  
Total assets $ 20,655   $ 20,646  
 
LIABILITIES
Lease and other financing obligations $ 13 $ 4
Accounts payable 360 375
Employee-related benefits 240 309
Income and mining taxes payable 71 248
Other current liabilities   396     462  
Current liabilities 1,080 1,398
Debt 4,042 4,040
Lease and other financing obligations 66 21
Reclamation and remediation liabilities 2,369 2,345
Deferred income tax liabilities 589 595
Employee-related benefits 392 386
Other non-current liabilities   284     342  
Total liabilities   8,822     9,127  
       
Contingently redeemable noncontrolling interest   48      
 
EQUITY
Common stock 857 855
Treasury stock (69 ) (30 )
Additional paid-in capital 9,595 9,592
Accumulated other comprehensive income (loss) (162 ) (292 )
Retained earnings   592     410  
Newmont stockholders' equity 10,813 10,535
Noncontrolling interests   972     984  
Total equity   11,785     11,519  
Total liabilities and equity $ 20,655   $ 20,646  
 

Non-GAAP Financial Measures

Non-GAAP financial measures are intended to provide additional
information only and do not have any standard meaning prescribed by U.S.
generally accepted accounting principles ("GAAP"). These measures should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. Unless otherwise noted, we
present the Non-GAAP financial measures of our continuing operations in
the tables below.

Adjusted net income (loss)

Management uses Adjusted net income (loss) to evaluate the Company's
operating performance and for planning and forecasting future business
operations. The Company believes the use of Adjusted net income (loss)
allows investors and analysts to understand the results of the
continuing operations of the Company and its direct and indirect
subsidiaries relating to the sale of products, by excluding certain
items that have a disproportionate impact on our results for a
particular period. Adjustments to continuing operations are presented
before tax and net of our partners' noncontrolling interests, when
applicable. The tax effect of adjustments is presented in the Tax effect
of adjustments line and is calculated using the applicable regional tax
rate. Management's determination of the components of Adjusted net
income (loss) are evaluated periodically and based, in part, on a review
of non-GAAP financial measures used by mining industry analysts. Net
income (loss) attributable to Newmont stockholders
is reconciled to
Adjusted net income (loss) as follows:

               
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Net income (loss) attributable to Newmont stockholders $ 292 $ 175 $ 484 $ 222
Net loss (income) attributable to Newmont stockholders from
discontinued operations (1)
  (18 )   15     (40 )   38  
Net income (loss) attributable to Newmont stockholders from
continuing operations
274 190 444 260
Loss (gain) on asset and investment sales, net (2) (99 ) (14 ) (99 ) (16 )
Restructuring and other, net (3) 7 1 12 7
Reclamation and remediation charges (4) 8 8 3
Change in fair value of marketable equity securities (5) (5 ) (5 )
Acquisition cost adjustments (6) 3 5
Impairment of long-lived assets, net (7) 2
Tax effect of adjustments (8) 18 3 16 (1 )
Valuation allowance and other tax adjustments (9)   (59 )   65     (47 )   124  
Adjusted net income (loss) $ 144   $ 248   $ 329   $ 384  
 
Net income (loss) per share, basic (10) $ 0.55 $ 0.33 $ 0.91 $ 0.42
Net loss (income) attributable to Newmont stockholders from
discontinued operations
  (0.03 )   0.03     (0.07 )   0.07  
Net income (loss) attributable to Newmont stockholders from
continuing operations
0.52 0.36 0.84 0.49
Loss (gain) on asset and investment sales, net (0.18 ) (0.03 ) (0.18 ) (0.03 )
Restructuring and other, net 0.01 0.02 0.01
Reclamation and remediation charges 0.01 0.01 0.01
Change in fair value of marketable equity securities (0.01 ) (0.01 )
Acquisition cost adjustments 0.01 0.01
Impairment of long-lived assets, net
Tax effect of adjustments 0.03 0.01 0.03
Valuation allowance and other tax adjustments   (0.11 )   0.11     (0.09 )   0.23  
Adjusted net income (loss) per share, basic $ 0.27   $ 0.46   $ 0.62   $ 0.72  
 
Net income (loss) per share, diluted (10) $ 0.54 $ 0.33 $ 0.90 $ 0.42
Net loss (income) attributable to Newmont stockholders from
discontinued operations
  (0.03 )   0.03     (0.07 )   0.07  
Net income (loss) attributable to Newmont stockholders from
continuing operations
0.51 0.36 0.83 0.49
Loss (gain) on asset and investment sales, net (0.18 ) (0.03 ) (0.18 ) (0.03 )
Restructuring and other, net 0.01 0.02 0.01
Reclamation and remediation charges 0.01 0.01 0.01
Change in fair value of marketable equity securities (0.01 ) (0.01 )
Acquisition cost adjustments 0.01 0.01
Impairment of long-lived assets, net
Tax effect of adjustments 0.03 0.01 0.03
Valuation allowance and other tax adjustments   (0.11 )   0.11     (0.09 )   0.23  
Adjusted net income (loss) per share, diluted $ 0.26   $ 0.46   $ 0.61   $ 0.72  
 
Weighted average common shares (millions):
Basic 533 533 534 533
Diluted 535 535 535 534

(1)   Net loss (income) attributable to Newmont stockholders from
discontinued operations relates to (i) adjustments in our Holt
royalty obligation, presented net of tax expense (benefit) of $5,
$(8), $9 and $(21), respectively, and (ii) Batu Hijau operations,
presented net of tax expense (benefit) of $-, $-, $1 and $-
respectively. For additional information regarding our discontinued
operations, see Note 9 to our Condensed Consolidated Financial
Statements.
(2)

Loss (gain) on asset and investment sales, included in Other
income, net
, primarily represents a gain from the exchange of
certain royalty interests for cash consideration and an equity
ownership and warrants in Maverix in June 2018, and a gain from
the exchange of our interest in the Fort á la Corne joint venture
for equity ownership in Shore Gold in June 2017. Amounts are
presented net of income (loss) attributable to noncontrolling
interests of $1, $-, $- and $-, respectively.

(3) Restructuring and other, included in Other expense, net, primarily
represents certain costs associated with severance, legal and other
settlements Amounts are presented net of income (loss) attributable
to noncontrolling interests of $(2), $-, $(3) and $(1), respectively.
(4)

Reclamation and remediation charges, included in Reclamation
and remediation
, represent revisions to remediation plans at
the Company's former historic mining operations.

(5)

Change in fair value of marketable equity securities, included in Other
income, net
, represents unrealized holding gains and losses on
marketable equity securities related primarily to Continental Gold
Inc.

(6)

Acquisition cost adjustments, included in Other expense, net,
represent net adjustments to the contingent consideration and
related liabilities associated with the acquisition of the final
33.33% interest in Boddington in June 2009.

(7)

Impairment of long-lived assets, net, included in Other
expense, net
, represents non-cash write-downs of long-lived
assets. Amounts are presented net of income (loss) attributable to
noncontrolling interests of $-, $-, $- and $(1), respectively.

(8)

The tax effect of adjustments, included in Income and mining
tax benefit (expense)
, represents the tax effect of
adjustments in footnotes (2) through (7), as described above, and
are calculated using the applicable regional tax rate.

(9)

Valuation allowance and other tax adjustments, included in Income
and mining tax benefit (expense)
, is recorded for items such
as foreign tax credits, alternative minimum tax credits, capital
losses and disallowed foreign losses. The adjustment in the three
and six months ended June 30, 2018 is due to a second quarter
reduction to the provisional expense for the Tax Cuts and Jobs Act
of ($45), a second quarter release of valuation allowance on
capital losses of ($15), increases to net operating losses and
other deferred tax assets at Yanacocha of $- and $11 respectively,
and other tax adjustments of $1 and $7, respectively. Amounts are
presented net of income (loss) attributable to noncontrolling
interests of $-, $-, $(5), and $-, respectively. The adjustment in
the three and six months ended June 30, 2017 is due to increases
in tax credit carryovers of $70 and $139, respectively, partially
offset by other tax adjustments of ($5) and ($15), respectively.

(10) Per share measures may not recalculate due to rounding.
 

Earnings before interest, taxes and depreciation and amortization
and Adjusted earnings before interest, taxes and depreciation and
amortization

Management uses Earnings before interest, taxes and depreciation and
amortization ("EBITDA") and EBITDA adjusted for non-core or certain
items that have a disproportionate impact on our results for a
particular period ("Adjusted EBITDA") as non-GAAP measures to evaluate
the Company's operating performance. EBITDA and Adjusted EBITDA do not
represent, and should not be considered an alternative to, net income
(loss), operating income (loss), or cash flow from operations as those
terms are defined by GAAP, and do not necessarily indicate whether cash
flows will be sufficient to fund cash needs. Although Adjusted EBITDA
and similar measures are frequently used as measures of operations and
the ability to meet debt service requirements by other companies, our
calculation of Adjusted EBITDA is not necessarily comparable to such
other similarly titled captions of other companies. The Company believes
that Adjusted EBITDA provides useful information to investors and others
in understanding and evaluating our operating results in the same manner
as our management and Board of Directors. Management's determination of
the components of Adjusted EBITDA are evaluated periodically and based,
in part, on a review of non-GAAP financial measures used by mining
industry analysts. Net income (loss) attributable to Newmont
stockholders
 is reconciled to EBITDA and Adjusted EBITDA as follows:

               
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Net income (loss) attributable to Newmont stockholders $ 292 $ 175 $ 484 $ 222
Net income (loss) attributable to noncontrolling interests 6 (24 ) 5 (13 )
Net loss (income) from discontinued operations (1) (18 ) 15 (40 ) 38
Equity loss (income) of affiliates 7 3 16 5
Income and mining tax expense (benefit) 18 166 123 277
Depreciation and amortization 279 310 580 610
Interest expense, net   49     64     102     131  
EBITDA $ 633   $ 709   $ 1,270   $ 1,270  
Adjustments:
Loss (gain) on asset and investment sales (2) $ (100 ) $ (14 ) $ (99 ) $ (16 )
Restructuring and other (3) 9 1 15 8
Reclamation and remediation charges (4) 8 8 3
Change in fair value of marketable equity securities (5) (5 ) (5 )
Acquisition cost adjustments (6) 3 5
Impairment of long-lived assets (7)               3  
Adjusted EBITDA $ 545   $ 699   $ 1,189   $ 1,273  
(1)   Net loss (income) from discontinued operations relates to (i)
adjustments in our Holt royalty obligation, presented net of tax
expense (benefit) of $5, $(8), $9 and $(21), respectively, and (ii)
Batu Hijau operations, presented net of tax expense (benefit) of $-,
$-, $1, $-, respectively. For additional information regarding our
discontinued operations, see Note 9 to our Condensed Consolidated
Financial Statements.
(2)

Loss (gain) on asset and investment sales, included in Other
income, net
, primarily represents a gain from the exchange of
certain royalty interests for cash consideration and an equity
ownership and warrants in Maverix in June 2018, and a gain from
the exchange of our interest in the Fort á la Corne joint venture
for equity ownership in Shore Gold Inc. ("Shore Gold") in June
2017.

(3)

Restructuring and other, included in Other expense, net,
represents certain costs associated with severance, legal and
other settlements.

(4)

Reclamation and remediation charges, included in Reclamation
and remediation
, represent revisions to remediation plans at
the Company's former historic mining operations.

(5)

Change in fair value of marketable equity securities, included in Other
income, net
, primarily represents unrealized holding gains and
losses on marketable equity securities related primarily to
Continental Gold Inc.

(6)

Acquisition cost adjustments, included in Other expense, net,
represent net adjustments to the contingent consideration and
related liabilities associated with the acquisition of the final
33.33% interest in Boddington in June 2009.

(7)

Impairment of long-lived assets, included in Other expense, net,
represents non-cash write-downs of long-lived assets.

 

Free Cash Flow

Management uses Free Cash Flow as a non-GAAP measure to analyze cash
flows generated from operations. Free Cash Flow is Net cash provided
by (used in) operating activities
less Net cash provided by (used
in) operating activities of discontinued operations
less Additions
to property, plant and mine development
as presented on the
Condensed Consolidated Statements of Cash Flows. The Company believes
Free Cash Flow is also useful as one of the bases for comparing the
Company's performance with its competitors. Although Free Cash Flow and
similar measures are frequently used as measures of cash flows generated
from operations by other companies, the Company's calculation of Free
Cash Flow is not necessarily comparable to such other similarly titled
captions of other companies.

The presentation of non-GAAP Free Cash Flow is not meant to be
considered in isolation or as an alternative to net income as an
indicator of the Company's performance, or as an alternative to cash
flows from operating activities as a measure of liquidity as those terms
are defined by GAAP, and does not necessarily indicate whether cash
flows will be sufficient to fund cash needs. The Company's definition of
Free Cash Flow is limited in that it does not represent residual cash
flows available for discretionary expenditures due to the fact that the
measure does not deduct the payments required for debt service and other
contractual obligations or payments made for business acquisitions.
Therefore, the Company believes it is important to view Free Cash Flow
as a measure that provides supplemental information to the Company's
Condensed Consolidated Statements of Cash Flows.

The following table sets forth a reconciliation of Free Cash Flow, a
non-GAAP financial measure, to Net cash provided by (used in)
operating activities
, which the Company believes to be the GAAP
financial measure most directly comparable to Free Cash Flow, as well as
information regarding Net cash provided by (used in) investing
activities
and Net cash provided by (used in) financing activities.

               
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Net cash provided by (used in) operating activities $ 399 $ 522 $ 662 $ 893
Less: Net cash used in (provided by) operating activities of
discontinued operations
  2     3     5     9  
Net cash provided by (used in) operating activities of continuing
operations
401 525 667 902
Less: Additions to property, plant and mine development   (258 )   (183 )   (489 )   (363 )
Free Cash Flow $ 143   $ 342   $ 178   $ 539  
 
Net cash provided by (used in) investing activities (1) $ (281 ) $ (282 ) $ (517 ) $ (440 )
Net cash provided by (used in) financing activities $ (52 ) $ (55 ) $ (231 ) $ (107 )
(1)  

Net cash provided by (used in) investing activities
includes Additions to property, plant and mine development,
which is included in the Company's computation of Free Cash Flow.

 

Costs applicable to sales per ounce/pound

Costs applicable to sales per ounce/pound are non-GAAP financial
measures. These measures are calculated by dividing the costs applicable
to sales of gold and copper by gold ounces or copper pounds sold,
respectively. These measures are calculated for the periods presented on
a consolidated basis. Costs applicable to sales per ounce/pound
statistics are intended to provide additional information only and do
not have any standardized meaning prescribed by GAAP and should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with GAAP. The measures are not necessarily
indicative of operating profit or cash flow from operations as
determined under GAAP. Other companies may calculate these measures
differently.

The following tables reconcile these non-GAAP measures to the most
directly comparable GAAP measures.

Costs applicable to sales per ounce

               
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Costs applicable to sales (1) $ 919 $ 955 $ 1,901 $ 1,873
Gold sold (thousand ounces) 1,224 1,439 2,536 2,767
Costs applicable to sales per ounce (2) $ 751 $ 664 $ 750 $ 677
(1)   Includes by-product credits of $18 and $31 during the three and six
months ended June 30, 2018, respectively, and $16 and $26 during the
three and six months ended June 30, 2017, respectively.
(2) Per ounce measures may not recalculate due to rounding.
 

Costs applicable to sales per pound

               
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Costs applicable to sales (1) $ 46 $ 44 $ 93 $ 83
Copper sold (million pounds) 27 32 54 58
Costs applicable to sales per pound (2) $ 1.70 $ 1.38 $ 1.72 $ 1.43
(1)   Includes by-product credits of $1 and $2 during the three and six
months ended June 30, 2018, respectively, and $2 and $3 during the
three and six months ended June 30, 2017, respectively.
(2) Per pound measures may not recalculate due to rounding.
 

All-In Sustaining Costs

Newmont has worked to develop a metric that expands on GAAP measures,
such as cost of goods sold, and non-GAAP measures, such as Costs
applicable to sales per ounce, to provide visibility into the economics
of our mining operations related to expenditures, operating performance
and the ability to generate cash flow from our continuing operations.

Current GAAP measures used in the mining industry, such as cost of goods
sold, do not capture all of the expenditures incurred to discover,
develop and sustain production. Therefore, we believe that all-in
sustaining costs is a non-GAAP measure that provides additional
information to management, investors, and analysts that aid in the
understanding of the economics of our operations and performance
compared to other producers and in the investor's visibility by better
defining the total costs associated with production.

All-in sustaining cost ("AISC") amounts are intended to provide
additional information only and do not have any standardized meaning
prescribed by GAAP and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with GAAP.
The measures are not necessarily indicative of operating profit or cash
flow from operations as determined under GAAP. Other companies may
calculate these measures differently as a result of differences in the
underlying accounting principles, policies applied and in accounting
frameworks such as in International Financial Reporting Standards
("IFRS"), or by reflecting the benefit from selling non-gold metals as a
reduction to AISC. Differences may also arise related to definitional
differences of sustaining versus development capital activities based
upon each company's internal policies.

The following disclosure provides information regarding the adjustments
made in determining the all-in sustaining costs measure:

Costs applicable to sales. Includes all direct and indirect costs
related to current production incurred to execute the current mine
plan. We exclude certain exceptional or unusual amounts from Costs
applicable to sales
 ("CAS"), such as significant revisions to
recovery amounts. CAS includes by-product credits from certain metals
obtained during the process of extracting and processing the primary
ore-body. CAS is accounted for on an accrual basis and excludes Depreciation
and amortization
 and Reclamation and remediation,
which is consistent with our presentation of CAS on the Condensed
Consolidated Statements of Operations. In determining AISC, only the CAS
associated with producing and selling an ounce of gold is included in
the measure. Therefore, the amount of gold CAS included in AISC is
derived from the CAS presented in the Company's Condensed Consolidated
Statements of Operations less the amount of CAS attributable to the
production of copper at our Phoenix and Boddington mines. The copper CAS
at those mine sites is disclosed in Note 3 to the Condensed Consolidated
Financial Statements. The allocation of CAS between gold and copper at
the Phoenix and Boddington mines is based upon the relative sales value
of gold and copper produced during the period.

Reclamation costs. Includes accretion expense related to
Reclamation liabilities and the amortization of the related Asset
Retirement Cost ("ARC") for the Company's operating properties.
Accretion related to the Reclamation liabilities and the amortization of
the ARC assets for reclamation does not reflect annual cash outflows but
are calculated in accordance with GAAP. The accretion and amortization
reflect the periodic costs of reclamation associated with current
production and are therefore included in the measure. The allocation of
these costs to gold and copper is determined using the same allocation
used in the allocation of CAS between gold and copper at the Phoenix and
Boddington mines.

Advanced projects, research and development and exploration.
Includes incurred expenses related to projects that are designed to
increase or enhance current production and exploration. We note that as
current resources are depleted, exploration and advanced projects are
necessary for us to replace the depleting reserves or enhance the
recovery and processing of the current reserves. As this relates to
sustaining our production, and is considered a continuing cost of a
mining company, these costs are included in the AISC measure. These
costs are derived from the Advanced projects, research and
development
 and Exploration amounts presented in
the Condensed Consolidated Statements of Operations less the amount
attributable to the production of copper at our Phoenix and Boddington
mines. The allocation of these costs to gold and copper is determined
using the same allocation used in the allocation of CAS between gold and
copper at the Phoenix and Boddington mines.

General and administrative. Includes costs related to
administrative tasks not directly related to current production, but
rather related to support our corporate structure and fulfill our
obligations to operate as a public company. Including these expenses in
the AISC metric provides visibility of the impact that general and
administrative activities have on current operations and profitability
on a per ounce basis.

Other expense, net. We exclude certain exceptional or unusual
expenses from Other expense, net, such as restructuring, as
these are not indicative to sustaining our current operations.
Furthermore, this adjustment to Other expense, net is also
consistent with the nature of the adjustments made to Net income
(loss) attributable to Newmont
stockholders as disclosed in the
Company's non-GAAP financial measure Adjusted net income (loss). The
allocation of these costs to gold and copper is determined using the
same allocation used in the allocation of CAS between gold and copper at
the Phoenix and Boddington mines.

Treatment and refining costs. Includes costs paid to smelters for
treatment and refining of our concentrates to produce the salable metal.
These costs are presented net as a reduction of Sales on our
Condensed Consolidated Statements of Operations.

Sustaining capital. We determined sustaining capital as those
capital expenditures that are necessary to maintain current production
and execute the current mine plan. Capital expenditures to develop new
operations, or related to projects at existing operations where these
projects will enhance production or reserves, are generally considered
non-sustaining or development capital. We determined the classification
of sustaining and development capital projects based on a systematic
review of our project portfolio in light of the nature of each project.
Sustaining capital costs are relevant to the AISC metric as these are
needed to maintain the Company's current operations and provide improved
transparency related to our ability to finance these expenditures from
current operations. The allocation of these costs to gold and copper is
determined using the same allocation used in the allocation of CAS
between gold and copper at the Phoenix and Boddington mines.

                                       
Advanced
Projects,
Research and Treatment All-In
Costs Development General Other and All-In Ounces Sustaining
Three Months Ended Applicable Reclamation and and Expense, Refining Sustaining Sustaining (000 )/Pounds Costs per
June 30, 2018

to Sales(1)(2)(3)

Costs(4)

Exploration(5)

Administrative

Net(6)

Costs

Capital(7)

Costs (millions) Sold

oz/lb(8)

Gold
Carlin $ 178 $ 2 $ 5 $ 1 $ $ $ 42 $ 228 187 $ 1,217
Phoenix 44 1 2 9 56 53 1,057
Twin Creeks 66 3 1 6 76 86 878
Long Canyon 18 3 21 43 502
CC&V 42 3 1 1 1 9 57 67 857
Other North America       18   1   1       2   22    
North America   348   5   28   4   2     2   71   460 436     1,056
 
Yanacocha 92 9 10 2 5 118 113 1,049
Merian 61 1 6 18 86 102 833
Other South America       10   3           13    
South America   153   10   26   3   2       23   217 215     1,005
 
Boddington 130 4 5 7 146 177 826
Tanami 74 3 17 94 103 925
Kalgoorlie 62 1 3 5 71 93 753
Other Australia     2   3   3   (2 )       6    
Australia   266   7   9   3   (2 )   5   29   317 373     851
 
Ahafo 90 1 2 1 1 6 101 101 1,003
Akyem 62 6 10 78 99 794
Other Africa       7   1           8    
Africa   152   7   9   2   1       16   187 200     942
 
Corporate and Other       18   51   1       2   72    
Total Gold $ 919 $ 29 $ 90 $ 63 $ 4   $ 7 $ 141 $ 1,253 1,224   $ 1,024
 
Copper
Phoenix $ 14 $ 1 $ $ $ $ 1 $ 2 $ 18 7 $ 2.57
Boddington   32             2   3   37 20     1.87
Total Copper $ 46 $ 1 $ $ $   $ 3 $ 5 $ 55 27   $ 2.05
                               
Consolidated $ 965 $ 30 $ 90 $ 63 $ 4   $ 10 $ 146 $ 1,308
(1)  

Excludes Depreciation and amortization and Reclamation
and remediation
.

(2) Includes by-product credits of $19 and excludes co-product revenues
of $81.
(3) Includes stockpile and leach pad inventory adjustments of $25 at
Carlin, $14 at Twin Creeks, $1 at Yanacocha, $18 at Ahafo and $15 at
Akyem.
(4) Reclamation costs include operating accretion and amortization of
asset retirement costs of $15 and $15, respectively, and exclude
non-operating accretion and reclamation and remediation adjustments
of $11 and $11, respectively.
(5)

Advanced projects, research and development and Exploration
of $3 at Carlin, $6 at Long Canyon, $2 at Yanacocha, $1 at Tanami,
$2 at Ahafo and $4 at Akyem are recorded in "Other" of the
respective region for development projects.

(6)

Other expense, net is adjusted for restructuring and other
costs of $9.

(7) Excludes development capital expenditures, capitalized interest and
changes in accrued capital, totaling $112. The following are major
development projects: Twin Creeks underground, Quecher Main, Merian,
Tanami expansions, Subika and Ahafo mill expansions.
(8) Per ounce and per pound measures may not recalculate due to rounding.
 

                                       
Advanced
Projects,
Research and Treatment All-In
Costs Development General Other and All-In Ounces Sustaining
Three Months Ended Applicable Reclamation and and Expense, Refining Sustaining Sustaining (000 )/Pounds Costs per
June 30, 2017

to Sales(1)(2)(3)

Costs(4)

Exploration(5)

Administrative

Net(6)

Costs

Capital(7)

Costs (millions) Sold

oz/lb(8)

Gold
Carlin $ 170 $ 2 $ 5 $ $ $ $ 47 $ 224 222 $ 1,009
Phoenix 46 2 3 3 2 56 57 982
Twin Creeks 61 1 2 10 74 124 597
Long Canyon 13 1 14 45 311
CC&V 74 1 3 1 4 83 132 629
Other North America       9     2       11    
North America   364   7   22   1   2   3   63   462 580     797
 
Yanacocha 134 18 5 1 2 9 169 120 1,408
Merian 64 4 4 72 120 600
Other South America       12   3   1       16    
South America   198   18   21   4   3     13   257 240     1,071
 
Boddington 147 1 1 5 13 167 211 791
Tanami 58 1 1 14 74 98 755
Kalgoorlie 55 1 4 60 90 667
Other Australia       7   2       2   11    
Australia   260   2   10   2     5   33   312 399     782
 
Ahafo 60 1 9 2 12 84 89 944
Akyem 73 3 1 4 81 131 618
Other Africa       6   4         10    
Africa   133   4   16   4   2     16   175 220     795
 
Corporate and Other       14   47   3     1   65    
Total Gold $ 955 $ 31 $ 83 $ 58 $ 10 $ 8 $ 126 $ 1,271 1,439   $ 883
 
Copper
Phoenix $ 16 $ $ $ $ $ $ 4 $ 20 10 $ 2.00
Boddington   28   1         4   1   34 22     1.55
Total Copper $ 44 $ 1 $ $ $ $ 4 $ 5 $ 54 32   $ 1.69
                               
Consolidated $ 999 $ 32 $ 83 $ 58 $ 10 $ 12 $ 131 $ 1,325
(1)  

Excludes Depreciation and amortization and Reclamation
and remediation
.

(2) Includes by-product credits of $18 and exclude co-product revenues
of $76.
(3) Includes stockpile and leach pad inventory adjustments of $9 at
Carlin, $8 at Twin Creeks, $24 at Yanacocha and $5 at Akyem.
(4) Reclamation costs include operating accretion and amortization of
asset retirement costs of $20 and $12, respectively, and exclude
non-operating accretion and reclamation and remediation adjustments
of $6 and $17, respectively.
(5)

Advanced projects, research and development and Exploration
of $5 at Long Canyon, $3 at Yanacocha, $5 at Tanami, $1 at Ahafo
and $4 at Akyem are recorded in "Other" of the respective region
for development projects.

(6)

Other expense, net is adjusted for restructuring and other
costs of $1 and acquisition cost adjustments of $3.

(7) Excludes development capital expenditures, capitalized interest and
changes in accrued capital, totaling $52. The following are major
development projects: Merian, Subika underground and the Tanami and
Ahafo mill expansions.
(8) Per ounce and per pound measures may not recalculate due to rounding.
 

                                       
Advanced
Projects,
Research and Treatment All-In
Costs Development General Other and All-In Ounces Sustaining
Six Months Ended Applicable Reclamation and and Expense, Refining Sustaining Sustaining (000 )/Pounds Costs per
June 30, 2018

to Sales(1)(2)(3)

Costs(4)

Exploration(5) Administrative

Net(6)

Costs

Capital(7)

Costs (millions) Sold

oz/lb(8)

Gold
Carlin $ 377 $ 5 $ 9 $ 3 $ $ $ 72 $ 466 416 $ 1,119
Phoenix 106 1 2 1 4 14 128 130 983
Twin Creeks 130 1 5 1 1 11 149 169 882
Long Canyon 34 1 5 40 87 464
CC&V 81 3 3 1 1 18 107 129 831
Other North America       31   1   2       4   38    
North America   728   11   50   7   4     4   124   928 931     996
 
Yanacocha 206 19 16 3 11 255 220 1,160
Merian 128 1 9 27 165 227 727
Other South America       21   6   1         28    
South America   334   20   46   6   4       38   448 447     1,002
 
Boddington 258 6 10 20 294 337 873
Tanami 150 1 8 1 29 189 229 828
Kalgoorlie 122 2 6 13 143 181 787
Other Australia     2   6   5   (3 )     1   11    
Australia   530   11   20   5   (2 )   10   63   637 747     853
 
Ahafo 180 2 4 1 1 13 201 205 982
Akyem 129 12 1 20 162 206 789
Other Africa       13   3           16    
Africa   309   14   17   4   2       33   379 411     923
 
Corporate and Other       31   100   1       6   138    
Total Gold $ 1,901 $ 56 $ 164 $ 122 $ 9   $ 14 $ 264 $ 2,530 2,536   $ 998
 
Copper
Phoenix $ 30 $ 1 $ $ $ $ 1 $ 4 $ 36 15 2.35
Boddington   63   1           5   6   75 39     1.95
Total Copper $ 93 $ 2 $ $ $   $ 6 $ 10 $ 111