Table of Contents

 

 

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 September 30, 2013

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: 001-31240

 

 

 

NEWMONT MINING CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		84-1611629
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
6363 South Fiddler’s Green Circle		80111
Greenwood Village, Colorado		(Zip Code)
(Address of Principal Executive Offices)

Registrant’s telephone number, including area code (303) 863-7414

 

 

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    x  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12-b2 of the Exchange Act. (Check one):

 

Large accelerated filer		x		Accelerated filer		¨
Non-accelerated filer		¨  (Do not check if a smaller reporting company.)		Smaller reporting company		¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b2 of the Exchange Act).    ¨  Yes    x  No

There were 493,059,095 shares of common stock outstanding on October 24, 2013 (and 4,811,413 exchangeable shares).

 

 

 

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Table of Contents

TABLE OF CONTENTS

 

				Page
		PART I
ITEM 1.		FINANCIAL STATEMENTS			1
		Condensed Consolidated Statements of Income			1
		Condensed Consolidated Statements of Comprehensive Income			2
		Condensed Consolidated Statements of Cash Flows			3
		Condensed Consolidated Balance Sheets			4
		Notes to Condensed Consolidated Financial Statements			5
ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			49
		Overview			49
		Selected Financial and Operating Results			51
		Consolidated Financial Results			52
		Results of Consolidated Operations			58
		Liquidity and Capital Resources			65
		Environmental			67
		Accounting Developments			68
		Non-GAAP Financial Measures			68
		Safe Harbor Statement			76
ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			77
ITEM 4.		CONTROLS AND PROCEDURES			79
		PART II
ITEM 1.		LEGAL PROCEEDINGS			81
ITEM 1A.		RISK FACTORS			81
ITEM 2.		ISSUER PURCHASES OF EQUITY SECURITIES			81
ITEM 3.		DEFAULTS UPON SENIOR SECURITIES			81
ITEM 4.		MINE SAFETY DISCLOSURES			81
ITEM 5.		OTHER INFORMATION			82
ITEM 6.		EXHIBITS			82
SIGNATURES					83
EXHIBIT INDEX					84

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PART I—FINANCIAL INFORMATION

 

ITEM 1.

FINANCIAL STATEMENTS.

NEWMONT MINING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(unaudited, in millions except per share)

 

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2013				2012				2013				2012
Sales (Note 3)		$	1,983			$	2,480			$	6,153			$	7,392
Costs and expenses
Costs applicable to sales (1) (Note 3)			1,036				1,088				3,733				3,107
Amortization			299				272				981				751
Reclamation and remediation (Note 4)			20				17				56				49
Exploration			60				115				195				309
Advanced projects, research and development			67				74				165				258
General and administrative			48				51				158				162
Write-downs (Note 5)			3				—				2,265				—
Other expense, net (Note 6)			84				131				260				377
			1,617				1,748				7,813				5,013
Other income (expense)
Other income, net (Note 7)			290				52				366				121
Interest expense, net			(76	)			(67	)			(211	)			(190	)
			214				(15	)			155				(69	)
Income (loss) before income and mining tax and other items			580				717				(1,505	)			2,310
Income and mining tax benefit (expense) (Note 8)			(154	)			(228	)			(10	)			(746	)
Equity income (loss) of affiliates			1				(9	)			(6	)			(39	)
Income (loss) from continuing operations			427				480				(1,521	)			1,525
Income (loss) from discontinued operations (Note 9)			(21	)			(33	)			53				(104	)
Net income (loss)			406				447				(1,468	)			1,421
Net loss (income) attributable to noncontrolling interests (Note 10)			2				(80	)			172				(285	)
Net income (loss) attributable to Newmont stockholders		$	408			$	367			$	(1,296	)		$	1,136
Net income (loss) attributable to Newmont stockholders:
Continuing operations		$	429			$	400			$	(1,349	)		$	1,240
Discontinued operations			(21	)			(33	)			53				(104	)
		$	408			$	367			$	(1,296	)		$	1,136
Income (loss) per common share (Note 11)
Basic:
Continuing operations		$	0.86			$	0.81			$	(2.72	)		$	2.50
Discontinued operations			(0.04	)			(0.07	)			0.11				(0.21	)
		$	0.82			$	0.74			$	(2.61	)		$	2.29
Diluted:
Continuing operations		$	0.86			$	0.81			$	(2.72	)		$	2.48
Discontinued operations			(0.04	)			(0.07	)			0.11				(0.21	)
		$	0.82			$	0.74			$	(2.61	)		$	2.27
Cash dividends declared per common share		$	0.25			$	0.35			$	1.025			$	1.05

  

 

(1)	Excludes Amortization and Reclamation and remediation.

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

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NEWMONT MINING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in millions)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2013				2012				2013				2012
Net income (loss)		$	406			$	447			$	(1,468	)		$	1,421
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities, net of $36, $62, $151 and $(67) tax benefit and (expense), respectively			(134	)			184				(413	)			(129	)
Foreign currency translation adjustments			(6	)			16				(28	)			16
Change in pension and other post-retirement benefits, net of $(61), $(3), $(69) and $(7) tax benefit and (expense), respectively			113				4				124				12
Change in fair value of cash flow hedge instruments, net of $(35), $(16), $110 and $(34) tax benefit and (expense), respectively
Net change from periodic revaluations			48				55				(189	)			128
Net amount reclassified to income			(4	)			(24	)			(39	)			(83	)
Net unrecognized gain (loss) on derivatives			44				31				(228	)			45
Other comprehensive income (loss)			17				235				(545	)			(56	)
Comprehensive income (loss)		$	423			$	682			$	(2,013	)		$	1,365
Comprehensive income (loss) attributable to:
Newmont stockholders		$	423			$	601			$	(1,842	)		$	1,079
Noncontrolling interests			—				81				(171	)			286
		$	423			$	682			$	(2,013	)		$	1,365

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

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NEWMONT MINING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)

 

		Nine Months Ended
		September 30,
		2013				2012
Operating activities:
Net income (loss)		$	(1,468	)		$	1,421
Adjustments:
Amortization			981				751
Stock based compensation and other non-cash benefits			55				55
Reclamation and remediation			56				49
Loss (income) from discontinued operations			(53	)			104
Write-downs			2,265				—
Impairment of marketable securities			52				39
Deferred income taxes			(570	)			25
Gain on asset and investment sales, net			(282	)			(12	)
Other operating adjustments and write-downs			697				149
Net change in operating assets and liabilities (Note 24)			(558	)			(1,039	)
Net cash provided from continuing operations			1,175				1,542
Net cash used in discontinued operations			(14	)			(12	)
Net cash provided from operations			1,161				1,530
Investing activities:
Additions to property, plant and mine development			(1,528	)			(2,394	)
Acquisitions, net			(13	)			(22	)
Sale of marketable securities			588				209
Purchases of marketable securities			(1	)			(209	)
Proceeds from sale of other assets			55				13
Other			(38	)			(48	)
Net cash used in investing activities			(937	)			(2,451	)
Financing activities:
Proceeds from debt, net			1,262				3,343
Repayment of debt			(1,060	)			(1,956	)
Payment of conversion premium on debt			—				(172	)
Proceeds from stock issuance, net			2				20
Sale of noncontrolling interests			32				—
Acquisition of noncontrolling interests			(13	)			—
Dividends paid to noncontrolling interests			(2	)			(3	)
Dividends paid to common stockholders			(509	)			(521	)
Other			(4	)			(2	)
Net cash provided from financing activities			(292	)			709
Effect of exchange rate changes on cash			(18	)			1
Net change in cash and cash equivalents			(86	)			(211	)
Cash and cash equivalents at beginning of period			1,561				1,760
Cash and cash equivalents at end of period		$	1,475			$	1,549

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

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NEWMONT MINING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in millions)

 

		At September 30,				At December 31,
		2013				2012
ASSETS
Cash and cash equivalents		$	1,475			$	1,561
Trade receivables			215				283
Accounts receivable			257				577
Investments (Note 16)			91				86
Inventories (Note 17)			793				796
Stockpiles and ore on leach pads (Note 18)			794				786
Deferred income tax assets			213				195
Other current assets (Note 19)			1,383				1,661
Current assets			5,221				5,945
Property, plant and mine development, net			16,322				18,010
Investments (Note 16)			540				1,446
Stockpiles and ore on leach pads (Note 18)			2,851				2,896
Deferred income tax assets			1,038				481
Other long-term assets (Note 19)			827				872
Total assets		$	26,799			$	29,650
LIABILITIES
Debt (Note 20)		$	587			$	10
Accounts payable			545				657
Employee-related benefits			316				339
Income and mining taxes			98				51
Other current liabilities (Note 21)			1,712				2,084
Current liabilities			3,258				3,141
Debt (Note 20)			5,949				6,288
Reclamation and remediation liabilities (Note 4)			1,479				1,457
Deferred income tax liabilities			758				858
Employee-related benefits			384				586
Other long-term liabilities (Note 21)			429				372
Total liabilities			12,257				12,702
Commitments and contingencies (Note 26)
EQUITY
Common stock			789				787
Additional paid-in capital			8,439				8,330
Accumulated other comprehensive income (loss)			(56	)			490
Retained earnings			2,361				4,166
Newmont stockholders’ equity			11,533				13,773
Noncontrolling interests			3,009				3,175
Total equity			14,542				16,948
Total liabilities and equity		$	26,799			$	29,650

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

NOTE 1 BASIS OF PRESENTATION

The interim Condensed Consolidated Financial Statements (“interim statements”) of Newmont Mining Corporation and its subsidiaries (collectively, “Newmont” or the “Company”) are unaudited. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these interim statements have been included. The results reported in these interim statements are not necessarily indicative of the results that may be reported for the entire year. These interim statements should be read in conjunction with Newmont’s Consolidated Financial Statements for the year ended December 31, 2012 filed February 22, 2013 on Form 10-K. The year-end balance sheet data was derived from the audited financial statements and, in accordance with the instructions to Form 10-Q, certain information and footnote disclosures required by United States generally accepted accounting principles (“GAAP”) have been condensed or omitted. References to “A$” refer to Australian currency, “C$” to Canadian currency and “NZ$” to New Zealand currency.

On March 12, 2013, Newmont completed the sale of the Hope Bay Project to TMAC Resources Inc. (“TMAC”). At September 30, 2013, Newmont held a 49.9% voting interest in TMAC and an economic interest of 70.4%. The Company has made available a $15 credit facility due June 2014. Newmont has identified TMAC as a Variable Interest Entity (“VIE”) under FASB Accounting Standards Codification (“ASC”)—Consolidation guidance. Based upon the ASC guidance for VIEs, and the ownership structure, Newmont has determined that it has a controlling financial interest in TMAC and is therefore the primary beneficiary. As such, Newmont consolidated TMAC in its consolidated financial statements. TMAC has indicated that they anticipate raising funds at an undetermined date through an initial public offering (“IPO”). Should such an IPO occur, which there can be no assurance of such offering occurring, it is expected that Newmont’s ownership will be reduced and Newmont would reevaluate whether or not it is still required to consolidate under the applicable ASC guidance.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recently Adopted Accounting Pronouncements

Reporting of Amounts reclassified out of Accumulated Other Comprehensive Income

In February 2013, ASC guidance was issued related to items reclassified from Accumulated Other Comprehensive Income(Loss). The new standard requires either in a single note or parenthetically on the face of the financial statements: (i) the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source and (ii) the income statement line items affected by the reclassification. Adoption of the new guidance, effective for the fiscal year beginning January 1, 2013, had no impact on the consolidated financial position, results of operations or cash flows.

Disclosures about Offsetting Assets and Liabilities

In November 2011, ASC guidance was issued related to disclosures about offsetting assets and liabilities. The new standard requires disclosures to allow investors to better compare financial statements prepared under U.S. GAAP with financial statements prepared under IFRS. In January 2013, an update was issued to further clarify that the disclosure requirements are limited to derivatives, repurchase agreements, and securities lending transactions to the extent that they are (i) offset in the financial statements or (ii) subject to an enforceable master netting arrangement or similar agreement. Adoption of the new guidance, effective for the fiscal year beginning January 1, 2013, had no impact on the consolidated financial position, results of operations or cash flows.

Recently Issued Accounting Pronouncements

Presentation of an Unrecognized Tax Benefit

In July 2013, ASC guidance was issued related to the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. The updated guidance requires an entity to net its unrecognized tax benefits against the deferred tax assets for all same jurisdiction net operating loss carryforward, a similar tax loss, or tax credit carryforwards. A gross presentation will be required only if such carryforwards are not available or would not be used by the entity to settle any additional income taxes resulting from disallowance of the uncertain tax position. The update is effective prospectively for the Company’s fiscal year beginning January 1, 2014.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

The Company is still evaluating the impact of the updated guidance on the consolidated financial position, results of operations or cash flows.

Foreign Currency Matters

In March 2013, ASC guidance was issued related to Foreign Currency Matters to clarify the treatment of cumulative translation adjustments when a parent sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity. The updated guidance also resolves the diversity in practice for the treatment of business combinations achieved in stages in a foreign entity. The update is effective prospectively for the Company’s fiscal year beginning January 1, 2014. The Company does not expect the updated guidance to have an impact on the consolidated financial position, results of operations or cash flows.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 3 SEGMENT INFORMATION

The Company’s reportable segments are based upon the Company’s management structure that is focused on the geographic region for the Company’s operations. Segment results for 2012 have been retrospectively revised to reflect organizational changes that moved the Indonesia operations to a separately managed region and moved the Hope Bay segment to Corporate and Other. Geographic regions now include North America, South America, Australia/New Zealand, Indonesia, Africa and Corporate and Other. The financial information relating to the Company’s segments is as follows:

 

						Costs								Advanced
						Applicable to								Projects and				Pre-Tax
		Sales				Sales				Amortization				Exploration				Income (Loss)
Three Months Ended September 30, 2013
Nevada		$	618			$	251			$	59			$	25			$	272
La Herradura			70				40				9				10				12
Other North America			—				—				—				1				(3	)
North America			688				291				68				36				281
Yanacocha			346				154				87				9				55
Conga			—				—				—				15				(17	)
Other South America			—				—				—				4				(4	)
South America			346				154				87				28				34
Boddington:
Gold			204				152				28
Copper			42				29				5
Total			246				181				33				1				20
Other Australia/New Zealand			357				202				60				7				93
Australia/New Zealand			603				383				93				8				113
Batu Hijau:
Gold			16				11				3
Copper			136				122				24
Total			152				133				27				2				(13	)
Other Indonesia			—				—				—				—				—
Indonesia			152				133				27				2				(13	)
Ahafo			194				75				19				12				80
Akyem			—				—				—				2				(3	)
Other Africa			—				—				—				3				(20	)
Africa			194				75				19				17				57
Corporate and Other			—				—				5				36				108
Consolidated		$	1,983			$	1,036			$	299			$	127			$	580

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

						Costs								Advanced
						Applicable to								Projects and				Pre-Tax
		Sales				Sales				Amortization				Exploration				Income (Loss)
Three Months Ended September 30, 2012
Nevada		$	734			$	292			$	61			$	47			$	330
La Herradura			88				31				5				11				39
Other North America			—				—				—				1				(2	)
North America			822				323				66				59				367
Yanacocha			585				185				83				14				254
Conga			—				—				—				9				(12	)
Other South America			—				—				—				15				(10	)
South America			585				185				83				38				232
Boddington:
Gold			281				155				37
Copper			60				39				7
Total			341				194				44				2				98
Other Australia/New Zealand			358				201				34				23				83
Australia/New Zealand			699				395				78				25				181
Batu Hijau:
Gold			24				17				2
Copper			146				99				21
Total			170				116				23				8				10
Other Indonesia			—				—				—				—				(1	)
Indonesia			170				116				23				8				9
Ahafo			204				69				18				20				98
Akyem			—				—				—				6				(6	)
Other Africa			—				—				—				3				(4	)
Africa			204				69				18				29				88
Corporate and Other			—				—				4				30				(160	)
Consolidated		$	2,480			$	1,088			$	272			$	189			$	717

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

		Sales				Costs Applicable to Sales				Amortization				Advanced Projects and Exploration				Pre-Tax Income (Loss)				Total Assets				Capital Expenditures(1)
Nine Months Ended September 30, 2013
Nevada		$	1,746			$	799			$	178			$	78			$	662			$	7,954			$	360
La Herradura			231				122				22				31				57				453				82
Other North America			—				—				—				2				(8	)			68				1
North America			1,977				921				200				111				711				8,475				443
Yanacocha			1,221				509				254				32				337				2,958				136
Conga			—				—				—				16				(17	)			1,714				184
Other South America			—				—				—				14				(16	)			150				65
South America			1,221				509				254				62				304				4,822				385
Boddington:
Gold			782				578				129
Copper			156				139				29
Total			938				717				158				1				(2,027	)			2,265				81
Other Australia/New Zealand			1,081				697				164				31				11				1,788				123
Australia/New Zealand			2,019				1,414				322				32				(2,016	)			4,053				204
Batu Hijau:
Gold			42				81				18
Copper			305				582				114
Total			347				663				132				13				(494	)			3,423				82
Other Indonesia			—				—				—				—				2				3				—
Indonesia			347				663				132				13				(492	)			3,426				82
Ahafo			589				226				56				36				255				1,615				139
Akyem			—				—				—				7				(10	)			1,239				209
Other Africa			—				—				—				11				(31	)			4				—
Africa			589				226				56				54				214				2,858				348
Corporate and Other			—				—				17				88				(226	)			3,165				7
Consolidated		$	6,153			$	3,733			$	981			$	360			$	(1,505	)		$	26,799			$	1,469

 

(1)	Includes a decrease in accrued capital expenditures of $59; consolidated capital expenditures on a cash basis were $1,528.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

						Costs								Advanced				Pre-Tax
		Sales				Applicable to Sales				Amortization				Projects and Exploration				Income (Loss)				Total Assets				Capital Expenditures(1)
Nine Months Ended September 30, 2012
Nevada		$	2,028			$	817			$	161			$	124			$	916			$	7,420			$	489
La Herradura			274				96				16				28				130				388				50
Other North America			—				—				—				2				(6	)			96				31
North America			2,302				913				177				154				1,040				7,904				570
Yanacocha			1,793				523				195				49				936				2,812				392
Conga			—				—				—				48				(51	)			1,617				467
Other South America			—				—				—				59				(54	)			82				54
South America			1,793				523				195				156				831				4,511				913
Boddington:
Gold			843				449				118
Copper			163				107				25
Total			1,006				556				143				7				278				4,678				77
Other Australia/New Zealand			1,116				573				106				66				356				2,212				226
Australia/New Zealand			2,122				1,129				249				73				634				6,890				303
Batu Hijau:
Gold			76				47				8
Copper			406				254				51
Total			482				301				59				22				42				3,662				98
Other Indonesia			—				—				—				—				2				5				—
Indonesia			482				301				59				22				44				3,667				98
Ahafo			693				241				58				42				348				1,362				176
Akyem			—				—				—				15				(16	)			876				305
Other Africa			—				—				—				8				(8	)			6				—
Africa			693				241				58				65				324				2,244				481
Corporate and Other			—				—				13				97				(563	)			4,307				22
Consolidated		$	7,392			$	3,107			$	751			$	567			$	2,310			$	29,523			$	2,387

 

(1)	Includes a decrease in accrued capital expenditures of $7; consolidated capital expenditures on a cash basis were $2,394.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 4 RECLAMATION AND REMEDIATION

The Company’s Reclamation and remediation expense consisted of:

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2013				2012				2013				2012
Reclamation		$	3			$	—			$	3			$	—
Accretion—operating			15				14				45				41
Accretion—non-operating			2				3				8				8
		$	20			$	17			$	56			$	49

At September 30, 2013 and December 31, 2012, $1,371 and $1,341, respectively, were accrued for reclamation obligations relating to operating properties. In addition, the Company is involved in several matters concerning environmental obligations associated with former, primarily historic, mining activities. Generally, these matters concern developing and implementing remediation plans at the various sites involved. At September 30, 2013 and December 31, 2012, $181 and $198, respectively, were accrued for such obligations. These amounts are also included in Reclamation and remediation liabilities.

The following is a reconciliation of Reclamation and remediation liabilities:

 

		Nine Months Ended September 30,
		2013				2012
Balance at beginning of period		$	1,539			$	1,240
Additions, changes in estimates and other			1				106
Liabilities settled			(41	)			(57	)
Accretion expense			53				49
Balance at end of period		$	1,552			$	1,338

The current portion of Reclamation and remediation liabilities of $73 and $82 at September 30, 2013 and December 31, 2012, respectively, are included in Other current liabilities (see Note 21).

NOTE 5 WRITE-DOWNS

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2013				2012				2013				2012
Property, plant and mine development
Yanacocha		$	2			$	—			$	3			$	—
Boddington			—				—				2,107				—
Other Australia/New Zealand			1				—				67				—
Batu Hijau			—				—				1				—
			3				—				2,178				—
Other long-term assets
Boddington			—				—				31				—
Other Australia/New Zealand			—				—				56				—
			—				—				87				—
		$	3			$	—			$	2,265			$	—

Write-downs totaled $3 and $2,265 for the three and nine months ended September 30, 2013, respectively. The 2013 write-downs were primarily due to a decrease in the Company’s long-term gold and copper price assumptions during the second quarter to $1,400 per ounce and $3.00 per pound, respectively, combined with rising operating costs. These factors represented significant changes in the business, requiring the Company to evaluate for impairment. For purposes of this evaluation, estimates of future cash flows of the individual reporting units were used to determine fair value. The estimated cash flows were derived from life-of-mine plans, developed using long-term pricing reflective of the current price environment and management’s projections for operating costs. Refer to Note 14 for additional information related to the fair value determination of the impairment.

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

Due to the above conditions, Goodwill was included in the Company’s impairment analysis. After-tax discounted future cash flows of reporting units with Goodwill were analyzed. Goodwill at Other Australia / New Zealand had a carrying value of $188 at December 31, 2012. As a result of this evaluation, the Company recorded an impairment of $56, resulting in a carrying value of $132 at September 30, 2013.

NOTE 6 OTHER EXPENSE, NET

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2013				2012				2013				2012
Transaction costs		$	—			$	—			$	45			$	12
Regional administration			12				22				48				72
Restructuring and other			20				48				50				48
Community development			42				18				72				69
Western Australia power plant			3				5				14				13
Hope Bay care and maintenance			—				27				(2	)			129
Other			7				11				33				34
		$	84			$	131			$	260			$	377

NOTE 7 OTHER INCOME, NET

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2013				2012				2013				2012
Gain on sale of investments, net		$	280			$	—			$	280			$	—
Foreign currency exchange, net			19				(1	)			56				(4	)
Refinery income, net			20				20				27				27
Canadian Oil Sands			—				11				21				31
Interest			4				2				10				9
Development projects, net			1				16				9				49
Gain on asset sales, net			1				2				2				12
Reduction of allowance for loan receivable			—				—				—				21
Impairment of marketable securities			(41	)			(7	)			(52	)			(39	)
Other			6				9				13				15
		$	290			$	52			$	366			$	121

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 8 INCOME AND MINING TAXES

During the third quarter of 2013, the Company recorded an estimated income and mining tax expense of $154, resulting in an effective tax rate of 26%. Estimated income and mining tax expense during the third quarter of 2012 was $228 for an effective tax rate of 32%. The lower effective tax rate on the income in the third quarter of 2013 is a result of tax planning related to the sale of the Canadian Oil Sands investment and the Canadian capital gains tax rate associated with the sale partially offset by a diluted benefit from percentage depletion.

During the first nine months of 2013, the estimated income and mining tax expense was $10, resulting in an effective tax rate of less than 0%. Estimated income and mining tax expense during the first nine months of 2012 was $746 for an effective tax rate of 32%. The lower effective tax rate on the loss in the first nine months of 2013 is primarily due to an increase in the Company’s valuation allowance on certain deferred tax assets partially offset by the benefit related to tax planning on the sale of the Canadian Oil Sands investment and the Canadian capital gains tax rate associated with the sale.

A valuation allowance is provided for those deferred tax assets for which it is more likely than not that the related benefits will not be realized. In determining the amount of the valuation allowance, each quarter the Company considers estimated future taxable income as well as feasible tax planning strategies in each jurisdiction to determine if the deferred tax assets are realizable. If it is determined that the Company will not realize all or a portion of its deferred tax assets, it will place or increase a valuation allowance. Conversely, if determined that it will ultimately be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced.

The Company’s income and mining tax expense differed from the amounts computed by applying the United States statutory corporate income tax rate for the following reasons:

 

		Three Months Ended September 30,																Nine Months Ended September 30,
		2013								2012								2013								2012
Income (loss) before income and miningtax and other items						$	580							$	717							$	(1,505	)						$	2,310
Tax at statutory rate			35	%		$	203				35	%		$	251				35	%		$	(527	)			35	%		$	809
Reconciling items:
Percentage depletion			(1	)%			(6	)			(7	)%			(53	)			7	%			(99	)			(7	)%			(161	)
Change in valuation allowance on deferred tax assets			1	%			7				3	%			19				(47	)%			698				3	%			65
Tax planning on sale of Canadian Oil Sands and Canadian capital gains tax rate			(11	)%			(61	)											4	%			(61	)
Other			2	%			11				1	%			11				—	%			(1	)			1	%			33
Income and mining tax expense (benefit)			26	%		$	154				32	%		$	228				(1	)%		$	10				32	%		$	746

The Company operates in numerous countries around the world and accordingly it is subject to, and pays annual income taxes under, the various income tax regimes in the countries in which it operates. Some of these tax regimes are defined by contractual agreements with the local government, and others are defined by the general corporate income tax laws of the country. The Company has historically filed, and continues to file, all required income tax returns and pay the income taxes reasonably determined to be due. The tax rules and regulations in many countries are highly complex and subject to interpretation. From time to time the Company is subject to a review of its historic income tax filings and in connection with such reviews, disputes can arise with the taxing authorities over the interpretation or application of certain rules to the Company’s business conducted within the country involved.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

At September 30, 2013, the Company’s total unrecognized tax benefit was $376 for uncertain income tax positions taken or expected to be taken on income tax returns. Of this, $33 represents the amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective income tax rate.

As a result of the statute of limitations that expire in the next 12 months in various jurisdictions, and possible settlements of audit-related issues with taxing authorities in various jurisdictions with respect to which none of the issues are individually significant, the Company believes that it is reasonably possible that the total amount of its net unrecognized income tax benefits will decrease by approximately $5 to $10 in the next 12 months.

NOTE 9 DISCONTINUED OPERATIONS

Discontinued operations include Holloway Mining Company, which owned the Holt-McDermott property (“Holt property”) that was sold to St. Andrew Goldfields Ltd. (“St. Andrew”) in 2006. In 2009, the Superior Court issued a decision finding Newmont Canada Corporation (“Newmont Canada”) liable for a sliding scale royalty on production from the Holt property, which was upheld in 2011 by the Ontario Court of Appeal. During the third quarter of 2013, the Company recorded a charge of $21, net of tax benefits of $10, related to an increase in the gold spot price at quarter end. The total recorded benefit for the first nine months of 2013, is $53, net of tax expense of $24, related to an overall decline in the gold spot price and an increase in discount rates. During the third quarter of 2012, the Company recorded an additional $33 charge, net of tax benefits of $2, to reflect higher gold prices offset by a decrease in future expected production at the Holt property due to new resource estimates published by St. Andrew. The total charges for the first nine months of 2012 were $104, net of tax benefits of $6.

Net operating cash used in discontinued operations of $14 and $12 in the first nine months of 2013 and 2012 respectively relates to payments on the Holt property royalty.

NOTE 10 NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2013				2012				2013				2012
Minera Yanacocha		$	6			$	73			$	89			$	268
TMAC			(3	)			—				(17	)			—
Batu Hijau			(10	)			3				(251	)			11
Other			5				4				7				6
		$	(2	)		$	80			$	(172	)		$	285

Newmont has a 51.35% ownership interest in Minera Yanacocha S.R.L. (“Yanacocha”), with the remaining interests held by Compañia de Minas Buenaventura, S.A.A. (43.65%) and the International Finance Corporation (5%).

Newmont has a 70.4% economic ownership interest in TMAC, with remaining interests held by various outside investors.

Newmont has a 48.5% effective economic interest in PT Newmont Nusa Tenggara (“PTNNT”) with remaining interests held by an affiliate of Sumitomo Corporation of Japan and various Indonesian entities. PTNNT operates the Batu Hijau copper and gold mine in Indonesia. Based on ASC guidance for variable interest entities, Newmont consolidates PTNNT in its Condensed Consolidated Financial Statements.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 11 INCOME (LOSS) PER COMMON SHARE

Basic income (loss) per common share is computed by dividing income (loss) available to Newmont common stockholders by the weighted average number of common shares outstanding during the period. Diluted income (loss) per common share is computed similarly except that weighted average common shares is increased to reflect all dilutive instruments.

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2013				2012				2013				2012
Net income (loss) attributable to Newmont stockholders
Continuing operations		$	429			$	400			$	(1,349	)		$	1,240
Discontinued operations			(21	)			(33	)			53				(104	)
		$	408			$	367			$	(1,296	)		$	1,136
Weighted average common shares (millions):
Basic			498				496				497				496
Effect of employee stock-based awards			—				1				—				1
Effect of convertible notes			—				2				—				3
Diluted			498				499				497				500
Income (loss) per common share
Basic:
Continuing operations		$	0.86			$	0.81			$	(2.72	)		$	2.50
Discontinued operations			(0.04	)			(0.07	)			0.11				(0.21	)
		$	0.82			$	0.74			$	(2.61	)		$	2.29
Diluted:
Continuing operations		$	0.86			$	0.81			$	(2.72	)		$	2.48
Discontinued operations			(0.04	)			(0.07	)			0.11				(0.21	)
		$	0.82			$	0.74			$	(2.61	)		$	2.27

Options to purchase 3 and 2 million shares of common stock at average exercise prices of $48 and $57 were outstanding at September 30, 2013 and 2012, respectively, but were not included in the computation of diluted weighted average common shares because their exercise prices exceeded the average price of the Company’s common stock for the respective periods presented.

Other outstanding options to purchase 1 million shares of common stock were not included in the computation of diluted weighted average common shares in the first nine months of 2013 because their effect would have been anti-dilutive.

Newmont is required to settle the principal amount of its 2014 and 2017 Convertible Senior Notes in cash and may elect to settle the remaining conversion premium (average share price in excess of the conversion price), if any, in cash, shares or a combination thereof. The effect of contingently convertible instruments on diluted earnings per share is calculated under the net share settlement method in accordance with ASC guidance. The conversion price exceeded the Company’s share price for the third quarter and first nine months of 2013, therefore no additional shares were included in the computation of diluted weighted average common shares. During the third quarter and first nine months of 2012, the Company’s share price exceeded the conversion price, resulting in additional shares included in the computation of diluted weighted average common shares.

In February 2012, the holders of the Company’s 2012 Convertible Senior Notes exercised their election to convert the notes. The Company elected to pay the $172 conversion premium with cash, and as a result no common shares were issued.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 12 EMPLOYEE PENSION AND OTHER BENEFIT PLANS

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2013				2012				2013				2012
Pension benefit costs, net
Service cost		$	9			$	7			$	27			$	22
Interest cost			11				10				31				31
Expected return on plan assets			(12	)			(11	)			(37	)			(33	)
Amortization, net			8				6				26				20
Settlements			5				—				5				—
		$	21			$	12			$	52			$	40
		Three Months Ended September 30,								Nine Months Ended September 30,
		2013				2012				2013				2012
Other benefit costs, net
Service cost		$	1			$	1			$	3			$	2
Interest cost			1				1				4				4
		$	2			$	2			$	7			$	6

In September 2013, the Company approved an amendment to the terms of its Salaried Pension and Pension Equalization Plans, effective beginning July 2014. The Company announced these changes in early October, and as a result, re-measured its pension liability at September 30, 2013. The discount rate used for purposes of the re-measurement was 5.25%. The re-measurement resulted in a decrease of the pension liability of $165 ($107, net of tax).

NOTE 13 STOCK BASED COMPENSATION

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2013				2012				2013				2012
Stock options		$	2			$	4			$	7			$	11
Restricted stock units			8				8				24				19
Performance leveraged stock units			2				2				6				8
Strategic stock units			1				1				4				2
		$	13			$	15			$	41			$	40

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 14 FAIR VALUE ACCOUNTING

Fair value accounting establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

 

Level 1

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

 

Level 2

Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

 

Level 3

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

The following table sets forth the Company’s assets and liabilities measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy. As required by accounting guidance, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

 

		Fair Value at September 30, 2013
		Total				Level 1				Level 2				Level 3
Assets:
Cash equivalents		$	113			$	113			$	—			$	—
Marketable equity securities:
Extractive industries			479				479				—				—
Other			4				4				—				—
Marketable debt securities:
Asset backed commercial paper			22				—				—				22
Corporate			12				—				12				—
Auction rate securities			4				—				—				4
Trade receivable from provisional copper and gold concentrate sales, net			122				122				—				—
		$	756			$	718			$	12			$	26
Liabilities:
Derivative instruments, net:
Foreign exchange forward contracts		$	80			$	—			$	80			$	—
Diesel forward contracts			1				—				1				—
Boddington contingent consideration			28				—				—				28
Holt property royalty			149				—				—				149
		$	258			$	—			$	81			$	177

The fair values of the derivative instruments in the table above are presented on a net basis. The gross amounts related to the fair value of the derivatives instruments above are included in the Derivatives Instruments Note (see Note 15). All other Fair Value disclosures in the above table are presented on a gross basis.

The Company’s cash equivalent instruments are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The cash equivalent instruments that are valued based on quoted market prices in active markets are primarily money market securities and U.S. Treasury securities.

The Company’s marketable equity securities are valued using quoted market prices in active markets and as such are classified within Level 1 of the fair value hierarchy. The securities are segregated based on industry. The fair value of the marketable equity securities is calculated as the quoted market price of the marketable equity security multiplied by the quantity of shares held by the Company.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

The Company’s marketable corporate debt securities are mainly comingled fund investments that are classified within Level 2 with the unit of account considered to be at the fund level.

The Company’s marketable debt securities also include investments in auction rate securities and asset backed commercial paper. The Company reviews the fair value for auction rate securities and asset backed commercial paper on a quarterly basis. The auction rate securities are traded in markets that are not active, trade infrequently and have little price transparency. Therefore, the investments are classified as Level 3 of the fair value hierarchy. See table below which sets forth a summary of the quantitative and qualitative information related to the significant unobservable inputs used in the calculation of the fair value.

The Company’s net trade receivable from provisional copper and gold concentrate sales, subject to final pricing, is valued using quoted market prices based on forward curves and, as such, is classified within Level 1 of the fair value hierarchy.

The Company’s derivative instruments are valued using pricing models and the Company generally uses similar models to value similar instruments. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit spreads, measures of volatility, and correlations of such inputs. The Company’s derivatives trade in liquid markets, and as such, model inputs can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy.

The estimated value of the Boddington contingent royalty was determined using a Monte Carlo valuation model which simulates future gold and copper prices and costs applicable to sales. This contingent royalty is capped at $100, and at June 30, 2012, the Company increased the accrual to the maximum of $100. The Boddington contingent royalty is classified within Level 3 of the fair value hierarchy. See table below which sets forth a summary of the quantitative and qualitative information related to the significant unobservable inputs used in the calculation of the fair value.

The estimated fair value of the Holt sliding scale royalty was determined using a Monte Carlo valuation model. The sliding scale royalty liability is classified within Level 3 of the fair value hierarchy. See table below which sets forth a summary of the quantitative and qualitative information related to the significant unobservable inputs used in the calculation of the fair value.

The following table sets forth a summary of the quantitative and qualitative information related to the unobservable inputs used in the calculation of the Company’s Level 3 financial assets and liabilities for the nine months ended September 30, 2013:

 

Description		At September 30, 2013				Valuation technique		Unobservable input		Range/Weighted average
Auction Rate Securities		$	4			Discounted cash flow		Weighted average recoverability rate			58	%
Asset Backed Commercial Paper			22			Discounted cash flow		Recoverability rate			72-88	%
Boddington Contingent Consideration			28			Monte Carlo		Discount rate			5	%
								Long Term Gold price		$	1,400
								Long Term Copper price		$	3.00
Holt property royalty			149			Monte Carlo		Weighted average discount rate			5	%
								Long Term Gold price		$	1,400

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

The following table sets forth a summary of changes in the fair value of the Company’s Level 3 financial assets and liabilities for the nine months ended September 30, 2013:

 

		Auction Rate Securities				Asset Backed Commercial Paper				Total Assets				Boddington Contingent Royalty				Holt Property Royalty				Total Liabilities
Balance at beginning of period		$	5			$	19			$	24			$	41			$	240			$	281
Unrealized loss			(1	)			—				(1	)			—				—				—
Settlements			—				—				—				(13	)			(15	)			(28	)
Revaluation			—				3				3				—				(76	)			(76	)
Balance at end of period		$	4			$	22			$	26			$	28			$	149			$	177

At September 30, 2013, assets and liabilities classified within Level 3 of the fair value hierarchy represent 3% and 69%, respectively, of total assets and liabilities measured at fair value.

During the second quarter of 2013, Newmont recorded write-downs related to Property, plant and equipment, net. (See Note 5). The estimated fair values of Property, plant and mine development, net, Goodwill and Intangible assets used in determining the second quarter impairment followed the discounted cash flow approach. The discounted cash flow model used significant unobservable inputs and is, therefore, considered within Level 3 of the fair value hierarchy.

The following table sets forth a summary of the quantitative and qualitative information related to the unobservable inputs used in the calculation of the Company’s nonrecurring Level 3 financial assets:

 

Description		Valuation technique		Unobservable input		Range/Weighted average
Property, plant and mine development, net		Discounted cash flow		Discount rate			4.25	%
				Long Term Gold price		$	1,400
				Long Term Copper price		$	3.00
				Long Term Exchange rate A$/US$			0.935
Goodwill and Intangible assets		Discounted cash flow		Discount rate			3.75-4.25	%
				Long Term Gold price		$	1,400
				Long Term Copper price		$	3.00
				Long Term Exchange rate A$/US$			0.935

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 15 DERIVATIVE INSTRUMENTS

The Company’s strategy is to provide shareholders with leverage to changes in gold and copper prices by selling its production at spot market prices. Consequently, the Company does not hedge its gold and copper sales. The Company continues to manage certain risks associated with commodity input costs, interest rates and foreign currencies using the derivative market. All of the derivative instruments described below were transacted for risk management purposes and qualify as cash flow hedges.

Cash Flow Hedges

The foreign currency, diesel and forward starting swap contracts are designated as cash flow hedges, and as such, the effective portion of unrealized changes in market value have been recorded in Accumulated other comprehensive income(loss) and are reclassified to earnings during the period in which the hedged transaction affects earnings. Gains and losses from hedge ineffectiveness are recognized in current earnings.

Foreign Currency Contracts

Newmont utilizes foreign currency contracts to reduce the variability of the US dollar amount of forecasted foreign currency expenditures caused by changes in exchange rates. Newmont hedges a portion of the Company’s A$ and NZ$ denominated operating expenditures which results in a blended rate realized each period. The hedging instruments are fixed forward contracts with expiration dates ranging up to five years from the date of issue. The principal hedging objective is reduction in the volatility of realized period-on-period $/A$ and $/NZ$ rates, respectively.

Newmont had the following foreign currency derivative contracts outstanding at September 30, 2013:

 

		Expected Maturity Date
																										Total/
		2013				2014				2015				2016				2017				2018				Average
A$ Operating Fixed Forward Contracts:
A$ notional (millions)			323				1,118				848				564				273				44				3,170
Average rate ($/A$)			0.95				0.93				0.92				0.92				0.91				0.89				0.93
Expected hedge ratio			87	%			71	%			55	%			37	%			18	%			7	%
NZ$ Operating Fixed Forward Contracts:
NZ$ notional (millions)			22				59				14				—				—				—				95
Average rate ($/NZ$)			0.80				0.80				0.77				—				—				—				0.80
Expected hedge ratio			73	%			54	%			16	%			—				—				—

In order to reduce derivative exposure to a lower Australian dollar, in October 2013 the Company began closing out certain foreign currency contracts. As of October 25, 2013 the Company settled approximately A$2,100 in notional contracts for a net gain of approximately $46. These gains will be held in Other Comprehensive Income “OCI” as the hedged transactions, A$ denominated operating costs, are still probable of occurring over the original time period. The amount deferred in OCI will be recognized in earnings over a period of five years as the original hedge transactions occur. From time to time and depending upon business considerations and market conditions, the Company may consider closing out additional Australian dollar hedging contracts, or conversely, may enter into new Australian dollar hedging contracts.

Diesel Fixed Forward Contracts

Newmont hedges a portion of its operating cost exposure related to diesel consumed at its Nevada operations to reduce the variability in realized diesel prices. The hedging instruments consist of a series of financially settled fixed forward contracts with expiration dates up to three years.

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

Newmont had the following diesel derivative contracts outstanding at September 30, 2013:

 

		Expected Maturity Date
																		Total/
		2013				2014				2015				2016				Average
Diesel Fixed Forward Contracts:
Diesel gallons (millions)			7				24				13				3				47
Average rate ($/gallon)			2.90				2.87				2.77				2.69				2.84
Expected hedge ratio			70	%			62	%			33	%			10	%

Forward Starting Swap Contracts

During 2011, Newmont entered into forward starting interest rate swap contracts with a total notional value of $2,000. These contracts hedged movements in treasury rates related to a debt issuance that occurred in the first quarter of 2012. On March 8, 2012, Newmont closed its sale of $2,500 senior notes consisting of 3.5% senior notes due 2022 in the principal amount of $1,500 (10-year notes), and 4.875% senior notes due 2042 in the principal amount of $1,000 (30-year notes). As a result, the forward-starting interest rate swaps were settled for $362, of which $349 represented the effective portion of the hedging instrument included in Accumulated other comprehensive income (loss). The net proceeds from the debt issuance were adjusted by the settlement amount of the swap contracts and included as a financing activity in the Condensed Consolidated Statements of Cash Flow.

Derivative Instrument Fair Values

Newmont had the following derivative instruments designated as hedges at September 30, 2013 and December 31, 2012:

 

		Fair Value
		At September 30, 2013
		Other Current Assets				Other Long- Term Assets				Other Current Liabilities				Other Long- Term Liabilities
Foreign currency exchange contracts:
A$ operating fixed forwards		$	26			$	18			$	42			$	84
NZ$ operating fixed forwards			2				—				—				—
Diesel fixed forwards			1				—				1				1
Total derivative instruments (Notes 19 and 21)		$	29			$	18			$	43			$	85
		Fair Value
		At December 31, 2012
		Other Current Assets				Other Long- Term Assets				Other Current Liabilities				Other Long- Term Liabilities
Foreign currency exchange contracts:
A$ operating fixed forwards		$	108				143				—				1
NZ$ operating fixed forwards			2				—				—				—
Diesel fixed forwards			2				1				1				1
Total derivative instruments (Notes 19 and 21)		$	112			$	144			$	1			$	2

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

The following tables show the location and amount of gains (losses) reported in the Company’s Condensed Consolidated Financial Statements related to the Company’s cash flow hedges.

 

		Foreign Currency								Diesel Forward								Forward Starting
		Exchange Contracts								Contracts								Swap Contracts
		2013				2012				2013				2012				2013				2012
For the three months ended September 30,
Cash flow hedging relationships:
Gain recognized in other comprehensive income (loss) (effective portion)		$	77			$	70			$	3			$	14			$	—			$	—
Gain (loss) reclassified from Accumulated other comprehensive income into income (loss) (effective portion) (1)			8				40				1				2				(5	)			(3	)
For the nine months ended September 30,
Cash flow hedging relationships:
Gain (loss) recognized in other comprehensive income (loss) (effective portion)		$	(291	)		$	156			$	(1	)		$	10			$	—			$	36
Gain (loss) reclassified from Accumulated other comprehensive income into income (loss) (effective portion) (1)			68				125				1				6				(14	)			(7	)
Gain reclassified from Accumulated other comprehensive income into income (loss) (ineffective portion) (2)			—				—				—				—				—				2

 

(1)	The gain (loss) recognized for the effective portion of cash flow hedges is included in Cost Applicable to Sales, Write-downs and Interest expense, net.

(2)	The ineffective portion recognized for cash flow hedges is included in Other income, net.

The amount to be reclassified from Accumulated other comprehensive income(loss), net of tax to income for derivative instruments during the next 12 months is a loss of approximately $22.

Provisional Copper and Gold Sales

The Company’s provisional copper and gold sales contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of the gold and copper concentrates at the prevailing indices’ prices at the time of sale. The embedded derivative, which does not qualify for hedge accounting, is marked to market through earnings each period prior to final settlement.

London Metal Exchange (“LME”) copper prices averaged $3.21 per pound during the three months ended September 30, 2013, compared with the Company’s recorded average provisional price of $3.16 per pound before mark-to-market adjustments and treatment and refining charges. LME copper prices averaged $3.35 per pound during the nine months ended September 30, 2013, compared with the Company’s recorded average provisional price of $3.30 per pound before mark-to-market adjustments and treatment and refining charges. During the three and nine months ended September 30, 2013, changes in copper prices resulted in a provisional pricing mark-to-market gains of $14 ($0.25 per pound) and loss of $10 ($0.06 per pound), respectively. At September 30, 2013, Newmont had copper sales of 59 million pounds priced at an average of $3.31 per pound, subject to final pricing over the next several months.

The average London P.M. fix for gold was $1,326 per ounce during the three months ended September 30, 2013, compared with the Company’s recorded average provisional price of $1,330 per ounce before mark-to-market adjustments and treatment and refining charges. The average London P.M. fix for gold was $1,456 per ounce during the nine months ended September 30, 2013, compared to the Company’s recorded average provisional price of $1,452 per ounce before mark-to-market adjustments and treatment and refining charges. During the three and nine months ended September 30, 2013, changes in gold prices resulted in a provisional pricing mark-to-market gains of $9 ($6 per ounce) and loss of $13 ($3 per ounce), respectively. At September 30, 2013, Newmont had gold sales of 50,000 ounces priced at an average of $1,327 per ounce, subject to final pricing over the next several months.

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 16 INVESTMENTS

 

		At September 30, 2013
		Cost/Equity				Unrealized								Fair/Equity
		Basis				Gain				Loss				Basis
Current:
Marketable Equity Securities:
Gabriel Resources Ltd.			75				—				(33	)			42
Paladin Energy Ltd.			24				—				—				24
Other			25				4				(4	)			25
		$	124			$	4			$	(37	)		$	91
Long-term:
Marketable Debt Securities:
Asset backed commercial paper		$	23			$	—			$	(1	)		$	22
Auction rate securities			7				—				(3	)			4
Corporate			13				—				(1	)			12
			43				—				(5	)			38
Marketable Equity Securities:
Regis Resources Ltd.			166				198				—				364
Other			30				2				(4	)			28
			196				200				(4	)			392
Other investments, at cost			13				—				—				13
Investment in Affiliates:
Minera La Zanja S.R.L.			81				—				—				81
Novo Resources Corp.			16				—				—				16
		$	349			$	200			$	(9	)		$	540

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

		At December 31, 2012
		Cost/Equity				Unrealized								Fair/Equity
		Basis				Gain				Loss				Basis
Current:
Marketable Equity Securities:
Paladin Energy Ltd.		$	60			$	—			$	(3	)		$	57
Other			17				14				(2	)			29
		$	77			$	14			$	(5	)		$	86
Long-term:
Marketable Debt Securities:
Asset backed commercial paper		$	25			$	—			$	(6	)		$	19
Auction rate securities			7				—				(2	)			5
Corporate			14				—				—				14
			46				—				(8	)			38
Marketable Equity Securities:
Canadian Oil Sands Ltd.			310				318				—				628
Gabriel Resources Ltd.			78				42				—				120
Regis Resources Ltd.			166				352				—				518
Other			51				14				—				65
			605				726				—				1,331
Other investments, at cost			12				—				—				12
Investment in Affiliates:
Minera La Zanja S.R.L.			65				—				—				65
		$	728			$	726			$	(8	)		$	1,446

In September 2013, the Company purchased a 35.7% share of Novo Resources Corporation (“Novo”) for approximately $16. Novo owns a majority of the Beaton’s Creek discovery with Millennium Minerals in the Pilbara region of Western Australia. The Company accounts for this ownership interest as an equity method investment.

On July 8, 2013, the Company sold its investment in Canadian Oil Sands Limited for $587, resulting in a pretax gain of $280 recorded in Other income, net.

During the three and nine months ended September 30, 2013, the Company recognized impairments for other-than-temporary declines in value of $41 and $52, respectively, for marketable equity securities, including $36 in the three and nine months related to its holdings of Paladin Energy, Ltd. During the three and nine months ended September 30, 2012, the Company recognized impairments for other-than-temporary declines in value of $7 and $39 for marketable equity securities.

The following tables present the gross unrealized losses and fair value of the Company’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by length of time that the individual securities have been in a continuous unrealized loss position:

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

		Less than 12 Months								12 Months or Greater								Total
At September 30, 2013		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
Marketable equity securities		$	73			$	41			$	—			$	—			$	73			$	41
Asset backed commercial paper			—				—				22				1				22				1
Auction rate securities			—				—				4				3				4				3
Corporate debt securities			12				1				—				—				12				1
		$	85			$	42			$	26			$	4			$	111			$	46
		Less than 12 Months								12 Months or Greater								Total
At December 31, 2012		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
Marketable equity securities		$	79			$	5			$	—			$	—			$	79			$	5
Asset backed commercial paper			—				—				19				6				19				6
Auction rate securities			—				—				5				2				5				2
		$	79			$	5			$	24			$	8			$	103			$	13

While the fair values of the Company’s investments in asset backed commercial paper and auction rate securities are below their respective cost, the Company views these declines as temporary. The Company intends to hold its investment in auction rate securities and asset backed commercial paper until maturity or such time that the market recovers and therefore considers these losses temporary.

NOTE 17 INVENTORIES

 

		At September 30,				At December 31,
		2013				2012
In-process		$	102			$	143
Concentrate			140				152
Precious metals			34				31
Materials, supplies and other			517				470
		$	793			$	796

The Company recorded write-downs of $13 and $3, classified as components of Costs applicable to sales and Amortization, respectively, for the first nine months of 2013, to reduce the carrying value of inventories to net realizable value. Of the write-downs in 2013, $1 is related to Nevada, $7 to Boddington, $1 to Other Australia/New Zealand and $7 to Batu Hijau.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 18 STOCKPILES AND ORE ON LEACH PADS

 

		At September 30,				At December 31,
		2013				2012
Current:
Stockpiles		$	544			$	602
Ore on leach pads			250				184
		$	794			$	786
Long-term:
Stockpiles		$	2,602			$	2,514
Ore on leach pads			249				382
		$	2,851			$	2,896

 

		At September 30,				At December 31,
		2013				2012
Stockpiles and ore on leach pads:
Nevada		$	897			$	699
La Herradura			70				57
Yanacocha			520				498
Boddington			375				474
Batu Hijau			1,368				1,543
Other Australia/New Zealand			125				173
Ahafo			274				235
Akyem			16				3
		$	3,645			$	3,682

The Company recorded write-downs of $611 and $146, classified as components of Costs applicable to sales and Amortization, respectively, for the first nine months of 2013 to reduce the carrying value of stockpiles and ore on leach pads to net realizable value. The Company recorded write-downs of $27 for the first nine months of 2012. Of the write-downs in 2013, $4 are related to Nevada, $104 to Yanacocha, $133 to Boddington, $462 to Batu Hijau, and $54 to Other Australia/New Zealand. Of the write-downs in 2012, $4 relate to Yanacocha and $23 to Other Australia/New Zealand.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 19 OTHER ASSETS

 

		At September 30,				At December 31,
		2013				2012
Other current assets:
Refinery metal inventory and receivable		$	1,009			$	1,183
Prepaid assets			232				213
Derivative instruments			29				112
Restricted cash			—				12
Other			113				141
		$	1,383			$	1,661
Other long-term assets:
Income tax receivable		$	219			$	76
Goodwill			132				188
Intangible assets			101				136
Restricted cash			95				90
Prepaid royalties			80				78
Debt issuance costs			65				73
Prepaid maintenance costs			31				17
Derivative instruments			18				144
Other			86				70
		$	827			$	872

NOTE 20 DEBT

 

		At September 30, 2013								At December 31, 2012
		Current				Non-Current				Current				Non-Current
2014 Convertible Senior Notes, net		$	554			$	—			$	—			$	535
2017 Convertible Senior Notes, net			—				486				—				471
2019 Senior Notes, net			—				897				—				897
2022 Senior Notes, net			—				1,490				—				1,489
2035 Senior Notes, net			—				598				—				598
2039 Senior Notes, net			—				1,088				—				1,087
2042 Senior Notes, net			—				992				—				992
Ahafo project finance facility			10				30				10				35
PTNNT revolving credit facility			—				365				—				180
Other			23				3				—				4
		$	587			$	5,949			$	10			$	6,288

Scheduled minimum debt repayments are $27 for the remainder of 2013, $565 in 2014, $11 in 2015, $11 in 2016, $857 in 2017 and $5,065 thereafter.

Corporate Letter of Credit Facility

In September 2013, the Company entered into a Letter of Credit Facility Agreement (“LC Agreement”) with BNP Paribas, New York Branch. The LC Agreement establishes a $175 letter of credit facility for a three year period to support reclamation obligations. Under the LC Agreement, the Company transferred $153 of letters of credit from the Corporate Revolving Credit Facility to the LC Agreement.

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 21 OTHER LIABILITIES

 

		At September 30,				At December 31,
		2013				2012
Other current liabilities:
Refinery metal payable		$	1,009			$	1,183
Accrued operating costs			213				336
Accrued capital expenditures			115				172
Interest			82				74
Reclamation and remediation liabilities			73				82
Deferred income tax			66				65
Derivative instruments			43				1
Royalties			34				42
Holt property royalty			16				21
Boddington contingent consideration			—				26
Taxes other than income and mining			7				14
Other			54				68
		$	1,712			$	2,084
Other long-term liabilities:
Holt property royalty		$	133			$	219
Derivative instruments			85				2
Income and mining taxes			72				65
Power supply agreements			41				46
Boddington contingent consideration			28				15
Deferred income tax from discontinued operations			24				—
Other			46				25
		$	429			$	372

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 22 CHANGES IN EQUITY

 

		Nine Months Ended September 30,
		2013				2012
Common stock:
At beginning of period		$	787			$	784
Stock based awards			2				2
At end of period			789				786
Additional paid-in capital:
At beginning of period			8,330				8,408
Conversion premium on convertible notes			—				(172	)
Stock based awards			61				71
Sale of noncontrolling interests			48				—
At end of period			8,439				8,307
Accumulated other comprehensive income (loss):
At beginning of period			490				652
Other comprehensive income (loss)			(546	)			(57	)
At end of period			(56	)			595
Retained earnings:
At beginning of period			4,166				3,052
Net income (loss) attributable to Newmont stockholders			(1,296	)			1,136
Dividends paid			(509	)			(521	)
At end of period			2,361				3,667
Noncontrolling interests:
At beginning of period			3,175				2,875
Net income (loss) attributable to noncontrolling interests			(172	)			285
Dividends paid to noncontrolling interests			(2	)			—
Sale of noncontrolling interests, net			7				—
Other comprehensive income			1				1
At end of period			3,009				3,161
Total equity		$	14,542			$	16,516

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 23 RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

 

		Unrealized gain on marketable securities, net				Foreign currency translation adjustments				Pension and other post- retirement benefit adjustments				Changes in fair value of cash flow hedge instruments				Total
December 31, 2012		$	542			$	177			$	(276	)		$	47			$	490
Change in other comprehensive income (loss) before reclassifications			(219	)			(29	)			107				(189	)			(330	)
Reclassifications from accumulated other comprehensive income (loss)			(194	)			—				17				(39	)			(216	)
Net current-period other comprehensive income (loss)			(413	)			(29	)			124				(228	)			(546	)
September 30, 2013		$	129			$	148			$	(152	)		$	(181	)		$	(56	)

 

Details about Accumulated Other Comprehensive Income (Loss) Components		Amount Reclassified from Accumulated Other Comprehensive Income (Loss)								Affected Line Item in the Condensed Consolidated Statement of Income (Loss)
		Three Months Ended September 30, 2013				Nine Months Ended September 30, 2013
Marketable securities adjustments:
Sale of marketable securities		$	(280	)		$	(280	)			Other income, net
Impairment of marketable securities			41				52				Other income, net
Total before tax			(239	)			(228	)
Tax benefit (expense)			37				34
Net of tax		$	(202	)		$	(194	)
Pension liability adjustments:
Amortization, net		$	8			$	26	(1)
Total before tax			8				26
Tax (expense) benefit			(3	)			(9	)
Net of tax		$	5			$	17
Hedge instruments adjustments:
Operating cash flow hedges		$	(9	)		$	(88	)			Costs applicable to sales
Capital cash flow hedges			—				1				Amortization
Capital cash flow hedges			—				18				Write-downs
Forward starting swap hedges			5				14				Interest expense, net
Total before tax			(4	)			(55	)
Tax benefit (expense)			—				16
Net of tax		$	(4	)		$	(39	)
Total reclassifications for the period, net of tax		$	(201	)		$	(216	)

 

(1)

This accumulated other comprehensive income (loss) component is included in General and administrative and costs that benefit the inventory/production process. Refer to Note 2 in the Newmont Annual Report on Form 10-K for the year ended December 31, 2012 for information on costs that benefit the inventory/production process.

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 24 NET CHANGE IN OPERATING ASSETS AND LIABILITIES

Net cash provided from operations attributable to the net change in operating assets and liabilities is composed of the following:

 

		Nine Months Ended September 30,
		2013				2012
Decrease (increase) in operating assets:
Trade and accounts receivable		$	255			$	(7	)
Inventories, stockpiles and ore on leach pads			(609	)			(603	)
EGR refinery assets			166				177
Other assets			(52	)			(81	)
Decrease in operating liabilities:
Accounts payable and other accrued liabilities			(111	)			(291	)
EGR refinery liabilities			(166	)			(177	)
Reclamation liabilities			(41	)			(57	)
		$	(558	)		$	(1,039	)

NOTE 25 CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

The following Condensed Consolidating Financial Statements are presented to satisfy disclosure requirements of Rule 3-10(e) of Regulation S-X resulting from the inclusion of Newmont USA Limited (“Newmont USA”), a wholly-owned subsidiary of Newmont, as a co-registrant with Newmont on debt securities issued under a shelf registration statement on Form S-3 filed under the Securities Act of 1933 under which securities of Newmont (including debt securities guaranteed by Newmont USA) may be issued (the “Shelf Registration Statement”). In accordance with Rule 3-10(e) of Regulation S-X, Newmont USA, as the subsidiary guarantor, is 100% owned by Newmont, the guarantees are full and unconditional, and no other subsidiary of Newmont guaranteed any security issued under the Shelf Registration Statement. There are no restrictions on the ability of Newmont or Newmont USA to obtain funds from its subsidiaries by dividend or loan.

At December 31, 2012, errors were identified in the previously reported condensed consolidating financial statements resulting from incorrectly applying the provisions of Rule 3-10(e) of Regulation S-X related to the presentation of the financial information of its subsidiary guarantor, Newmont USA. In the previously reported information, the Company presented Newmont USA on a consolidated basis with its non-guarantor subsidiaries and under Rule 3-10 of Regulation S-X Newmont USA should have presented its investment in subsidiaries based upon its proportionate share of its non-guarantor subsidiaries’ net assets (similar to the equity method of accounting). In addition, the Company corrected the Newmont Mining Corporation column for investments in subsidiaries previously presented in the Eliminations column. The tables following the revised condensed consolidating financial statements illustrate the effects of the errors, which relate to the columns for Newmont Mining Corporation, Newmont USA, Other Subsidiaries and Eliminations, on previously reported condensed consolidating financial information for the three and nine months ended September 30, 2012.

The errors to the Newmont USA column for the incorrect presentation resulted in no change in previously reported line items for net income attributable to Newmont and stockholders’ equity. It did however have a significant impact on the previously reported cash balance, and cash flow from operations, investing and financing activities of Newmont USA as a result of the deconsolidation of its subsidiaries and the one line proportionate accounting pick up. Further, the Other Subsidiaries column changed by corresponding adjustments and to give effect to intercompany balances to include the non-guarantor subsidiaries of Newmont USA and the Eliminations column changes as a result of the above changes. In addition, the Company corrected an error in the Newmont Mining Corporation column related to stockholders’ equity and investment in subsidiaries. This was a result of a gain associated with a partial sale of a subsidiary that was previously included in the Eliminations column. The cash flow statement in the Newmont Mining Corporation column was revised to reflect earnings from subsidiaries, net of dividends received.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

The Company concluded these errors were not material individually or in the aggregate to any of the previously issued financial statements taken as a whole. These errors had no impact on the consolidated financial statements of Newmont or any debt covenants and had no impact on the ability of Newmont’s subsidiaries to dividend cash to Newmont. The impact of these corrections to the applicable prior year period is reflected in the revised financial information and notes below.

In addition to the above, in April of the current year the Company merged one of its subsidiaries into Newmont USA. As a result of this merger, the prior periods presented have been revised to reflect this change as if the transaction had occurred at the beginning of the earliest period presented in accordance with the accounting guidance for business combinations between entities under common control.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

		Three Months Ended September 30, 2013
																		Newmont
		Newmont																Mining
		Mining				Newmont				Other								Corporation
Condensed Consolidating Statement of Income		Corporation				USA				Subsidiaries				Eliminations				Consolidated
Sales		$	—			$	587			$	1,396			$	—			$	1,983
Costs and expenses
Costs applicable to sales (1)			—				229				807				—				1,036
Amortization			—				50				249				—				299
Reclamation and remediation			—				2				18				—				20
Exploration			—				10				50				—				60
Advanced projects, research and development			—				14				53				—				67
General and administrative			—				23				25				—				48
Write-downs			—				—				3				—				3
Other expense, net			—				21				63				—				84
			—				349				1,268				—				1,617
Other income (expense)
Other income, net			(12	)			2				300				—				290
Interest income—intercompany			31				7				6				(44	)			—
Interest expense—intercompany			(2	)			—				(42	)			44				—
Interest expense, net			(78	)			(1	)			3				—				(76	)
			(61	)			8				267				—				214
Income (loss) before income and mining tax and other items			(61	)			246				395				—				580
Income and mining tax benefit (expense)			21				(46	)			(129	)			—				(154	)
Equity income (loss) of affiliates			448				(92	)			20				(375	)			1
Income (loss) from continuing operations			408				108				286				(375	)			427
Income (loss) from discontinued operations			—				—				(21	)			—				(21	)
Net income (loss)			408				108				265				(375	)			406
Net loss (income) attributable to noncontrolling interests			—				—				(4	)			6				2
Net income (loss) attributable to Newmont stockholders		$	408			$	108			$	261			$	(369	)		$	408
Comprehensive income (loss)		$	423			$	218			$	173			$	(391	)		$	423
Comprehensive loss (income) attributable to noncontrolling interests			—				—				(5	)			5				—
Comprehensive income (loss) attributable to Newmont stockholders		$	423			$	218			$	168			$	(386	)		$	423

 

(1)	Excludes Amortization and Reclamation and remediation.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

		Three Months Ended September 30, 2012
																		Newmont
		Newmont																Mining
		Mining				Newmont				Other								Corporation
Condensed Consolidating Statement of Income		Corporation				USA				Subsidiaries				Eliminations				Consolidated
Sales		$	—			$	681			$	1,799			$	—			$	2,480
Costs and expenses
Costs applicable to sales (1)			—				245				843				—				1,088
Amortization			—				53				219				—				272
Reclamation and remediation			—				3				14				—				17
Exploration			—				31				84				—				115
Advanced projects, research and development			—				11				63				—				74
General and administrative			—				40				11				—				51
Other expense, net			—				19				112				—				131
			—				402				1,346				—				1,748
Other income (expense)
Other income, net			—				11				41				—				52
Interest income—intercompany			46				10				(6	)			(50	)			—
Interest expense—intercompany			(3	)			—				(47	)			50				—
Interest expense, net			(67	)			(3	)			3				—				(67	)
			(24	)			18				(9	)			—				(15	)
Income (loss) before income and mining tax and other items			(24	)			297				444				—				717
Income and mining tax benefit (expense)			8				(82	)			(154	)			—				(228	)
Equity income (loss) of affiliates			383				(8	)			40				(424	)			(9	)
Income (loss) from continuing operations			367				207				330				(424	)			480
Income (loss) from discontinued operations			—				—				(33	)			—				(33	)
Net income (loss)			367				207				297				(424	)			447
Net loss (income) attributable to noncontrolling interests			—				—				(103	)			23				(80	)
Net income (loss) attributable to Newmont stockholders		$	367			$	207			$	194			$	(401	)		$	367
Comprehensive income (loss)		$	601			$	224			$	576			$	(719	)		$	682
Comprehensive loss (income) attributable to noncontrolling interests			—				—				(104	)			23				(81	)
Comprehensive income (loss) attributable to Newmont stockholders		$	601			$	224			$	472			$	(696	)		$	601

 

(1)	Excludes Amortization and Reclamation and remediation.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

		Nine Months Ended September 30, 2013
																		Newmont
		Newmont																Mining
		Mining				Newmont				Other								Corporation
Condensed Consolidating Statement of Income		Corporation				USA				Subsidiaries				Eliminations				Consolidated
Sales		$	—			$	1,635			$	4,518			$	—			$	6,153
Costs and expenses
Costs applicable to sales (1)			—				725				3,008				—				3,733
Amortization			—				146				835				—				981
Reclamation and remediation			—				6				50				—				56
Exploration			—				38				157				—				195
Advanced projects, research and development			—				37				128				—				165
General and administrative			—				77				81				—				158
Write-downs			—				—				2,265				—				2,265
Other expense, net			—				51				209				—				260
			—				1,080				6,733				—				7,813
Other income (expense)
Other income, net			(10	)			11				365				—				366
Interest income—intercompany			113				22				16				(151	)			—
Interest expense—intercompany			(8	)			—				(143	)			151				—
Interest expense, net			(211	)			(7	)			7				—				(211	)
			(116	)			26				245				—				155
Income (loss) before income and mining tax and other items			(116	)			581				(1,970	)			—				(1,505	)
Income and mining tax benefit (expense)			40				(167	)			117				—				(10	)
Equity income (loss) of affiliates			(1,220	)			(439	)			(100	)			1,753				(6	)
Income (loss) from continuing operations			(1,296	)			(25	)			(1,953	)			1,753				(1,521	)
Income (loss) from discontinued operations			—				—				53				—				53
Net income (loss)			(1,296	)			(25	)			(1,900	)			1,753				(1,468	)
Net loss (income) attributable to noncontrolling interests			—				—				252				(80	)			172
Net income (loss) attributable to Newmont stockholders		$	(1,296	)		$	(25	)		$	(1,648	)		$	1,673			$	(1,296	)
Comprehensive income (loss)		$	(1,842	)		$	77			$	(2,649	)		$	2,401			$	(2,013	)
Comprehensive loss (income) attributable to noncontrolling interests			—				—				252				(81	)			171
Comprehensive income (loss) attributable to Newmont stockholders		$	(1,842	)		$	77			$	(2,397	)		$	2,320			$	(1,842	)

 

(1)	Excludes Amortization and Reclamation and remediation.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

 

		Nine Months Ended September 30, 2012
																		Newmont
		Newmont																Mining
		Mining				Newmont				Other								Corporation
Condensed Consolidating Statement of Income		Corporation				USA				Subsidiaries				Eliminations				Consolidated
Sales		$	—			$	1,867			$	5,525			$	—			$	7,392
Costs and expenses
Costs applicable to sales (1)			—				745				2,362				—				3,107
Amortization			—				134				617				—				751
Reclamation and remediation			—				8				41				—				49
Exploration			—				74				235				—				309
Advanced projects, research and development			—				33				225				—				258
General and administrative			—				105				57				—				162
Other expense, net			—				36				341				—				377
			—				1,135				3,878				—				5,013
Other income (expense)
Other income, net			2				23				96				—				121
Interest income—intercompany			125				24				(6	)			(143	)			—
Interest expense—intercompany			(11	)			—				(132	)			143				—
Interest expense, net			(186	)			(6	)			2				—				(190	)
			(70	)			41				(40	)			—				(69	)
Income (loss) before income and mining tax and other items			(70	)			773				1,607				—				2,310
Income and mining tax benefit (expense)			24				(210	)			(560	)			—				(746	)
Equity income (loss) of affiliates			1,182				362				157				(1,740	)			(39	)
Income (loss) from continuing operations			1,136				925				1,204				(1,740	)			1,525
Income (loss) from discontinued operations			—				—				(104	)			—				(104	)
Net income (loss)			1,136				925				1,100				(1,740	)			1,421
Net loss (income) attributable to noncontrolling interests			—				—				(373	)			88				(285	)
Net income (loss) attributable to Newmont stockholders		$	1,136			$	925			$	727			$	(1,652	)		$	1,136
			&