Newmont Announces Full Year and Fourth Quarter 2019 Results

Newmont Corporation (NYSE: NEM, TSX: NGT) (Newmont or the Company) today announced full year and fourth quarter 2019 results.

2019 highlights

• Assembled industry-leading portfolio of assets with the deepest project pipeline in top-tier jurisdictions after successfully completing two historic transactions
• Produced 6.3 million attributable ounces of gold* and reported CAS* of $721 per ounce and AISC* of $966 per ounce, in line with the Company’s full year guidance
• Delivered $2.9 billion of GAAP net income and adjusted EBITDA* of $3.7 billion
• Generated $2.9 billion of cash from continuing operations and Free Cash Flow* of $1.4 billion
• Reported industry-leading 100.2 million ounces of Gold Mineral Reserves
• Delivered four projects on four continents on-time and within budget: Tanami Power in Australia, Borden in Canada, Ahafo Mill Expansion in Africa, and Quecher Main in Peru
• Approved Tanami Expansion 2 project to extend mine life and increase profitable production
• Maintained investment-grade balance sheet with $2.2 billion of consolidated cash and a leverage ratio of 1.2x net debt to pro forma adjusted EBITDA*
• Recognized for industry-leading ESG performance: ranked as top gold company in DJSI for 5th consecutive year and as 3rd most transparent company in S&P 500 by Bloomberg ESG Disclosure score; recognized as top mining company on FORTUNE’s 2020 list of World’s Most Admired Companies

Outlook**

• Stable production outlook of 6.4 million ounces in 2020, and 6.2 million ounces to 6.7 million ounces per year longer term through 2024 with an improving costs base
• On track to realize $500 million per year of improvements in 2021, exceeding our commitment by approximately 40 percent
• Expect to realize $1.4 billion in cash proceeds in Q1 2020 through divestitures
• Announced plan to increase annual divided by 79 percent to $1.00 per share; effective upon approval and declaration of Q1 2020 dividend in April 2020

*See corresponding footnotes provided on the following pages below.
**See cautionary statement at end of release regarding forward-looking statements, including with respect to financial outlook and expected dividends.

“In 2019, Newmont generated $1.4 billion in free cash flow from the gold industry’s best portfolio of assets and we continued to deliver on our promises by completing four projects on four continents within budget,” said Tom Palmer, President and Chief Executive Officer. “We returned $1.4 billion to shareholders through dividends and share repurchases and as we enter our centenary year, Newmont is well positioned with the industry’s largest reserve base strategically located in top-tier jurisdictions that enables us to sustain production and generate robust cash flow across price cycles.”

Full Year 2019 Financial and Production Summary

• Net income: Delivered GAAP net income from continuing operations attributable to Newmont stockholders of $2.9 billion or $3.91 per diluted share and adjusted net income1 of $970 million or $1.32 per diluted share
• EBITDA: Generated $3.7 billion in adjusted EBITDA1, an increase of 45 percent from the prior year
• Cash flow: Reported consolidated cash flow from continuing operations of $2.9 billion and free cash flow2 of $1.4 billion, an increase of 57 percent and 76 percent over the prior year, respectively
• Gold costs applicable to sales (CAS)3: Reported CAS of $721 per ounce, in line with the Company’s full year guidance
• Gold all-in sustaining costs (AISC)3: Reported AISC of $966 per ounce, in line with the Company’s full year guidance
• Attributable gold production4: Produced 6.3 million ounces of gold, an increase of 23 percent over the prior year and in line with the Company’s full year guidance
• Portfolio improvements: Assembled industry’s best collection of assets in top-tier jurisdictions with the acquisition of Goldcorp Inc. (Goldcorp) and formation of the Nevada Gold Mines (NGM) joint venture; successfully delivered four projects on four continents with Tanami Power in Australia, the Borden mine in Canada, Ahafo Mill Expansion in Ghana, and Quecher Main in Peru; approved Tanami Expansion 2 and Autonomous Haulage at Boddington; formed strategic partnerships in GT Gold, Prodigy Gold and Irving Resources to fund exploration activities in Canada, Australia and Japan, respectively; divested the Nimba iron ore project in Guinea; entered into binding agreements to sell Red Lake in Canada and investment holdings in Continental Gold; completed divestiture of the Company’s 50 percent interest in Kalgoorlie Consolidated Gold Mines (KCGM) in Australia.
• 2020 Outlook: Attributable production of 6.4 million ounces, CAS of $750 per ounce and AISC of $975 per ounce, as previously reported by the Company in January 2020

Fourth Quarter 2019 Financial and Production Summary

• Net income: Delivered GAAP net income from continuing operations attributable to Newmont stockholders of $537 million or $0.66 per diluted share; delivered adjusted net income1 of $410 million or $0.50 per diluted share, an increase of $0.10 compared to the prior year quarter
• EBITDA: Generated $1.3 billion in adjusted EBITDA1, an increase of 70 percent from the prior year quarter
• Cash flow: Reported consolidated cash flow from continuing operations of $1.2 billion and free cash flow2 of $778 million, an increase of 63 percent and 64 percent over the prior year quarter, respectively
• Gold costs applicable to sales (CAS)3: Reported CAS of $691 per ounce, an increase of five percent over the prior year quarter
• Gold all-in sustaining costs (AISC)3: Reported AISC of $946 per ounce, an increase of 12 percent over the prior year quarter
• Attributable gold production: Produced 1.83 million ounces of gold, an increase of 27 percent over the prior year quarter

Full Year and Fourth Quarter 2019 Results

Net income (loss) from continuing operations attributable to Newmont stockholders for the full year was $2,877 million or $3.91 per diluted share, up $2,597 million from the prior year, primarily due to the $2,390 million gain recognized on the formation of NGM, as well as higher production from the acquired Goldcorp assets and higher average realized gold prices. Net income from continuing operations attributable to Newmont stockholders for the quarter was $537 million or $0.66 per diluted share, an increase of $540 million from the prior year quarter primarily due to higher production from acquired assets and higher realized gold prices.

Adjusted net income was $970 million or $1.32 per diluted share for the full year, compared to $718 million or $1.34 per diluted share in the prior year. Adjusted net income for the quarter was $410, or $0.50 per diluted share, compared to $214 or $0.40 in the prior year quarter. Primary adjustments to fourth quarter net income include $(0.11) related to changes in the fair value of investments, ($0.10) related to valuation allowances and tax effects of adjustments, and $0.05 related to other charges including reclamation and remediation charges, integration costs and restructuring.

Revenue increased 34 percent to $9,740 million for the full year and 45 percent to $2,967 million for the quarter, compared to the prior year. These increases were primarily due to new production from the acquired Goldcorp assets and higher average realized gold prices.

Average realized gold price5 was 11 percent higher for the full year at $1,399 per ounce and 20 percent higher for the quarter at $1,478 per ounce compared to prior year. The average realized price for copper was four percent lower for the full year at $2.63 per pound, and five percent higher for the quarter at $2.76 per pound, compared to the prior year. For the full year, the average realized price for silver, lead and zinc were $15.79 per ounce, $0.79 per pound and $0.80 per pound, respectively. For the quarter, the average realized price for silver, lead and zinc were $15.49 per ounce, $0.77 per pound and $0.78 per pound, respectively.

Gold CAS increased 19 percent to $4,663 million for the full year and 19 percent to $1,251 million for the quarter, compared to the prior year, primarily due to additional costs from the acquired Goldcorp assets. For the quarter, Gold CAS per ounce increased five percent to $691 per ounce primarily due to higher stripping ratios at Merian and Yanacocha and higher gold price-driven royalties. For the full year, Gold CAS per ounce increased by two percent to $721 per ounce primarily due to unfavorable stripping and higher gold price driven royalties partially offset by higher gold ounces sold and lower stockpile and leach pad inventory adjustments.

Gold AISC increased six percent to $966 per ounce for the full year and increased 12 percent to $946 per ounce for the quarter, compared to the prior year, primarily due to higher gold CAS per ounce and higher sustaining capital spend.

Attributable gold production6 increased 23 percent to 6.29 million ounces for the full year and 27 percent to 1.83 million ounces for the quarter, compared to prior year, primarily due to new production from the Goldcorp assets and higher grade and throughput from the Subika Underground and Ahafo Mill Expansion projects, partially offset by lower production from KCGM.

Attributable gold equivalent ounce (GEO) production from other metals increased to 624 thousand ounces for the full year and 229 thousand ounces for the quarter, compared to prior year, primarily due to new silver, lead and zinc production from Peñasquito, partially offset by the classification of Phoenix copper as a by-product following the formation of NGM. CAS from other metals totaled $532 million for the full year and $208 million for the quarter. CAS per GEO increased 10 percent to $858 per ounce for the full year, primarily due to high unit costs at Peñasquito. CAS per GEO decreased 4 percent to $791 per ounce for the quarter, primarily due to higher gold equivalent ounces of other metals sold and a favorable Australian dollar foreign currency exchange. AISC per GEO increased 31 percent to $1,222 per ounce for the full year and 21 percent to $1,171 per ounce for the quarter, compared to the prior year, primarily due to higher CAS per GEO, higher sustaining capital spend and higher treatment and refining costs.

Capital expenditures7 increased 42 percent to $1,463 million for the full year and 60 percent to $430 million for the quarter, compared to the prior year, primarily due to increased sustaining capital for the Goldcorp assets and ongoing investment in growth projects, including Quecher Main, Ahafo Mill Expansion, Borden, Musselwhite Materials Handling, Tanami Expansion 2, Yanacocha Sulfides and Ahafo North.

Consolidated operating cash flow from continuing operations increased 57 percent to $2,876 million for the full year and 63 percent to $1,208 million for the quarter, compared to the prior year, primarily due to higher realized gold prices and the inclusion of sales from the Goldcorp assets. Free cash flow2 also increased to $1,413 million for the full year and $778 million for the quarter, compared to the prior year, primarily due to higher operating cash flow, partially offset by higher capital expenditures.

Balance sheet ended the quarter with $2.2 billion of consolidated cash and an investment-grade credit profile, issued $700 million of 2.800 percent Senior Notes due 2029 and retired $626 million of 5.125 percent Senior Notes due on October 1, 2019.

Corporate updates

• Goldcorp transaction: On January 14, 2019, Newmont entered into a definitive agreement to acquire all outstanding common shares of Goldcorp. On April 18, 2019, Newmont closed its acquisition of Goldcorp following receipt of all regulatory approvals and approval by Newmont’s and Goldcorp’s shareholders of the resolutions at the shareholder meetings on April 11 and April 4, 2019, respectively, for total cash and non-cash consideration of $9,456 million in a primarily stock transaction. The combined company is known as Newmont Corporation, continuing to be traded on the New York Stock Exchange under the ticker NEM and listed on the Toronto Stock Exchange under the ticker NGT.
• Nevada Gold Mines Joint Venture: On July 1, 2019, Newmont and Barrick Gold Corporation (Barrick) consummated the transaction establishing Nevada Gold Mines LLC (NGM). NGM is owned 38.5 percent by Newmont and owned 61.5 percent and operated by Barrick. The formation of NGM diversifies the Company’s footprint in Nevada and allows Newmont to benefit from additional efficiencies through integrated mine planning and processing. The Company accounts for its interest in NGM using the proportionate consolidation method, thereby recognizing its pro-rata share of the assets, liabilities and operations of NGM. Fourth quarter 2019 EBITDA for NGM was $267 million and for the year ended 2019 was $501 million. Attributable gold production was 366 thousand ounces with CAS of $722 per ounce and AISC of $883 per ounce for the fourth quarter 2019 and 710 thousand ounces with CAS of $712 per ounce and AISC of $901 per ounce for the year ended 2019.

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 Tanami Expansion 2 and Musselwhite Materials Handling have been approved and the projects are in execution. Additional projects not listed below represent incremental improvements to production and cost guidance.

• Tanami Expansion 2 (Australia) secures Tanami’s future as a long-life, low cost producer with potential to extend mine life to 2040 through the addition of a 1,460m hoisting shaft and supporting infrastructure to achieve 3.5Mt per year of production and provide a platform for future growth. The expansion is expected to increase average annual gold production by approximately 150,000 to 200,000 ounces per year for the first five years beginning in 2023, and is expected to reduce operating costs by approximately 10 percent. Capital costs for the project are estimated to be between $700 million and $800 million.
• Musselwhite Materials Handling (North America) improves material movement from Musselwhite’s two main zones below Lake Opapimiskan. An underground shaft will hoist ore from the underground crushers, reducing haulage distances and ventilation costs. The Company expects the project to be fully operational in mid-2020.

Outlook

Newmont’s outlook reflects steady gold production and ongoing investment in its operating assets and most promising growth prospects. The Company does not include development projects that have not reached execution stage in its outlook which represents upside to guidance.

Attributable production

Attributable gold production is expected to be stable at 6.2 to 6.7 million ounces across the five year period. The 2020 outlook of 6.4 million ounces increases from 2019 with a full year of production from the acquired Goldcorp assets. Production is expected to remain between 6.2 and 6.7 million ounces per year longer-term through 2024 supported by a steady base from Boddington, Tanami, Ahafo, Peñasquito, and the Company’s equity ownership interest in the Nevada Gold Mines joint venture, which is further enhanced by solid production from the Company’s nine other operating mines and its equity ownership in Pueblo Viejo.

Regional production overview:

Australia

2020: Full Potential at Boddington improves mining rates and grade increases throughout the year with the stripping campaign nearing completion in the South Pit and Tanami continues to deliver solid performance.

2021-2022: Boddington reaches higher grade ore while Tanami delivers steady performance.

Africa

2020: A full year of production from the Ahafo Mill Expansion is offset by mine sequencing in both the Subika and Awonsu open pits, a change in mining method at Subika Underground and lower grades at Akyem.

2021-2022: Subika Underground begins to deliver higher tons and Subika open pit reaches higher grades, partially offset by sequencing at Akyem.

North America

2020: A full year of operations at Peñasquito, Éléonore and Porcupine increase production. Peñasquito reaches higher grades and Musselwhite is expected to reach normal production levels in early October, partially offset by lower leach pad production at CC&V.

2021: Musselwhite contributes a full year of operations, Peñasquito continues in higher grade ore and achieves higher throughput, and Porcupine benefits from higher grades in the Borden underground and Hollinger open pit mines.

2022: Peñasquito is impacted by lower gold grade from mine sequencing.

South America*

*Includes Pueblo Viejo interest with ~375Koz in 2020 and 2021, and ~385Koz in 2022.

2020: A full year of production from Cerro Negro and Pueblo Viejo is partially offset by Yanacocha depleting higher grades at the Tapado Oeste pit and Merian transitioning to harder rock.

2021: Cerro Negro transitions to lower grades as mining concludes in the Eureka District and Yanacocha ramps down the oxide mill.

2022: Merian enters a stripping phase partially offset by higher grades at Cerro Negro.

Nevada Gold Mines (NGM)

Production for the Company’s 38.5 percent ownership interest in NGM.

Attributable co-product GEOs

2020: A full year of production from Peñasquito is partially offset by lower copper production at Boddington.

2021: Boddington copper production increases and Peñasquito delivers steady production.

2022-2024: Peñasquito delivers higher silver and lead production from the Chile Colorado pit, followed by higher silver and zinc production from the Peñasco pit.

Gold cost outlook

• Costs improve throughout the five year period with continuing Full Potential improvements and ongoing investment in profitable projects.
• CAS is expected to be $750 per ounce for 2020 from lower production in Africa and South America, partially offset by improvements in North America with a full year of operations at Peñasquito. CAS is expected to be between $650 and $750 per ounce for 2021 and 2022, and between $600 and $700 per ounce in 2023 and 2024.
• AISC is expected to be $975 per ounce in 2020 from higher costs in South America and Africa, partially offset by improved CAS in North America. AISC is expected to be between $850 and $950 per ounce in 2021 and 2022, and improves to between $800 and $900 per ounce longer-term through 2024. Future Full Potential savings and profitable ounces from projects that are not yet approved represent additional upside not currently captured in guidance.

Regional cost overview:

Australia

2020: CAS benefits from lower spend at Tanami for paste fill, partially offset by increased stockpile processing at Boddington. AISC includes increased sustaining capital spend at Boddington to advance Autonomous Haulage and at Tanami for ventilation.

2021-2022: Unit costs improve as Boddington production increases.

Africa

2020: CAS is higher than 2019 on lower production at Akyem and Ahafo with stripping in the Subika open pit and the change in mining method at Subika Underground. AISC is higher on increased unit CAS partially offset by lower sustaining capital at Ahafo.

2021-2022: CAS improves from higher production at Ahafo with increased ore tons from Subika Underground and the end of stripping in the Subika open pit. AISC increases in 2021 on higher sustaining capital spend for tailings storage facilities at both Ahafo and Akyem.

North America

2020: Unit costs improve as Peñasquito delivers a full year of production with Full Potential improvements and the removal higher cost production from Red Lake, partially offset by lower production at CC&V and higher costs at Musselwhite prior to resuming full operations in October.

2021-2022: Unit costs improve with increased production and the delivery of Full Potential improvements throughout the region.

South America

2020: Unit costs increase on lower production at Yanacocha and from higher mine and milling costs at Merian from harder rock, partially offset by Full Potential improvements at Cerro Negro.

2021: Unit costs improve with lower operating costs at Yanacocha from the end of Quecher Main stripping and ramping down the oxide mill, partially offset by lower production at Cerro Negro.

2022: CAS increases with Merian entering a stripping campaign and Yanacocha production declining. AISC increases with CAS and higher sustaining capital at Cerro Negro.

Nevada Gold Mines

CAS & AISC for the Company’s 38.5 percent ownership interest in NGM.

Attributable co-product costs per GEO

2020: Unit costs improve driven by a full year of production at Peñasquito.

2021-2022: Unit costs per GEO increase from mine sequencing at Peñasquito, partially offset by higher copper production at Boddington.

2023-2024: CAS per GEO improves on higher production at Peñasquito and AISC per GEO improves on lower CAS and lower sustaining capital spend.

Consolidated Capital

Sustaining capital remains steady, covering infrastructure, equipment and ongoing mine development.

Development capital includes Tanami Expansion 2 in Australia, Musselwhite Materials Handling in Canada, Subika Underground in Ghana, underground development at Cerro Negro in Argentina, expenditures related to the Company’s ownership interest in Nevada Gold Mines, and to progress studies for future projects. Yearly decreases reflect the Company’s approach to only including development projects that have reached execution stage.

Consolidated expense outlook – Interest expense is expected to be $300 million for 2020 from a full year of expense related to the acquired Goldcorp debt. Investment in exploration and advanced projects is expected to be $450 million in 2020 with a full year of spend for the acquired Goldcorp assets. The 2020 outlook for general & administrative costs is expected to be $265 million as synergies of $120 million are realized from the Goldcorp transaction and depreciation and amortization is expected to be $2,125 million.

Assumptions and sensitivities – Newmont’s outlook assumes $1,200 per ounce gold price, $16 per ounce silver price, $2.75 per pound copper price, $1.20 per pound zinc price, $0.95 per pound lead price, $0.75 USD/AUD exchange rate, $0.77 USD/CAD exchange rate, and $60 per barrel WTI oil price. Assuming a 35% incremental tax rate, $100 per ounce increase in gold price would deliver an expected $400 million improvement in attributable free cash flow.

2020 Outlooka

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: