Newmont Successfully Completes Sale of Indonesian Assets
Newmont Mining Corp. (NYSE: NEM) (Newmont or the Company) successfully completed the sale of its ownership stake in PT Newmont Nusa Tenggara (PTNNT), which operates the Batu Hijau copper and gold mine in Indonesia, to PT Amman Mineral Internasional (PTAMI). The asset’s name now changes to PT Amman Mineral Nusa Tenggara (PTAMNT).
Newmont received total consideration of $1.3 billion for its 48.5 percent economic interest in PTNNT. This amount is comprised of gross cash proceeds of $920 million and contingent payments of $403 million tied to higher copper prices and any future development of the Elang deposit. Nusa Tenggara Mining Corporation, majority owned by Sumitomo Corporation, also sold its 24.5 percent ownership stake to PTAMI. Newmont and PTAMI have worked cooperatively throughout the sales process and developed a productive relationship.
“Newmont has been a long-term partner with the government of Indonesia and we support the new owner as they take responsibility for the asset and its team,” said Gary Goldberg, President and Chief Executive Officer. “Selling our ownership stake in PTNNT streamlines our portfolio and allows us to focus on assets that best match our capabilities for creating value and managing risk. We will use sale proceeds to continue self-funding our highest margin projects, retiring debt and paying competitive dividends. With the sale completed, our long-term cost and production outlook remains stable, and approximately three quarters of our gold reserves are now based in the United States and Australia. We appreciate the support of the Batu Hijau team, PTAMI, local and national government leaders, our host communities and our partners in completing the sale, and will continue to work together to effect a smooth transition.”
Batu Hijau was classified as held for sale and reported as a discontinued operation in Newmont’s third quarter and prior period financial results. Newmont’s adjusted net income including attributable net income from Batu Hijau would have been $0.51 per share1. The Company reported GAAP net income attributable to Newmont stockholders from continuing operations of $0.32 per share; and adjusted net income of $0.38 per share1 in the third quarter.
Newmont has generated $2.8 billion in fairly valued asset sales, advanced five organic growth projects, and lowered net debt by 56 percent since 2013 with the completion of this sale. The Company’s balance sheet, free cash flow generation, and project pipeline remain among the strongest in the gold sector. Newmont recently completed its Merian project in Suriname on schedule and $150 million below budget and its Cripple Creek & Victor expansion, and is progressing a new mine at Long Canyon and expansions at Tanami and Carlin. Taken together, these projects are expected to add one million ounces of lower cost gold production over the next two years.
About Newmont
Newmont is a leading gold and copper producer. The Company’s operations are primarily in the United States, Australia, Ghana, Peru and Suriname. Newmont is the only gold producer listed in the S&P 500 Index and was named the mining industry leader by the Dow Jones Sustainability World Index in 2015 and 2016. The Company is an industry leader in value creation, supported by its leading technical, environmental, social and safety performance. Newmont was founded in 1921 and has been publicly traded since 1925.
Cautionary Statement Regarding Forward Looking Statements:
This release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbor created by such sections and other applicable laws. Such forward-looking statements may include, without limitation, future project funding, future debt repayment and retirement, future dividend payments, cost and production outlook, future receipt of contingent payments (which remain contingent upon copper prices and any future development of Elang), future development and operation of PTAMNT (including the Elang deposit), future development at Long Canyon, Tanami and Carlin and associated future production and costs, and other future financial performance or business expectations. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, estimates are based upon certain assumptions, which may prove to be incorrect, and “forward looking statements" remain subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by the “forward-looking statements." Risks relating to "forward looking statements" may include, but are not limited to, metals price volatility, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, political and operational risks, community relations, conflict resolution and outcome of projects or oppositions and governmental regulation and judicial outcomes. For a more detailed discussion of such risks and other factors, see the Company’s 2015 Annual Report on Form 10-K, filed on February 17, 2016, with the Securities and Exchange Commission (SEC), and the Company’s Form 10-Q for the quarter ended September 30, 2016, filed with the SEC on October 26, 2016 as well as the Company’s other SEC filings. The Company does not undertake any obligation to release publicly revisions to any “forward-looking statement” or to comment on expectations of, or statements made by PTAMI or other third parties in respect of the transaction, except as may be required under applicable securities laws. Investors should not assume that any lack of update to a previously issued “forward-looking statement” constitutes a reaffirmation of that statement. Continued reliance on “forward-looking statements” is at investors' own risk.
Non-GAAP Financial Measures
Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by 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.
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 production and sale of minerals, by excluding certain items that have a disproportionate impact on our results for a particular period. The net income (loss) adjustments are generally presented net of tax at the Company’s statutory effective tax rate of 35% and net of our partners’ noncontrolling interests when applicable. The impact of the adjustments through the Company’s valuation allowance is included in Tax adjustments. The Tax adjustment also includes items such as foreign tax credits, alternative minimum tax credits, capital losses and disallowed foreign losses. 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:
1 Non-GAAP measure. See pages 2 – 4 for reconciliation to net income attributable to Newmont stockholders
Three Months Ended | Nine Months Ended | |||||||||||||||||
September 30, | September 30, | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Net income (loss) attributable to Newmont stockholders | $ | (358 | ) | $ | 219 | $ | (283 | ) | $ | 474 | ||||||||
Loss (income) attributable to Newmont stockholders from discontinued operations (1) | ||||||||||||||||||
Holt property royalty obligation | 19 | (17 | ) | 72 | (34 | ) | ||||||||||||
Batu Hijau operations | (69 | ) | (43 | ) | (195 | ) | (165 | ) | ||||||||||
Loss on classification as held for sale | 577 | — | 577 | — | ||||||||||||||
Net income (loss) attributable to Newmont stockholders from continuing operations | 169 | 159 | 171 | 275 | ||||||||||||||
Impairment of investments (2) | — | 19 | — | 66 | ||||||||||||||
Impairment of long-lived assets (3) | — | 2 | 2 | 4 | ||||||||||||||
Restructuring and other (4) | 6 | 7 | 14 | 14 | ||||||||||||||
Acquisition costs (5) | 6 | 5 | 7 | 10 | ||||||||||||||
Loss (gain) on asset and investment sales (6) | (4 | ) | (36 | ) | (108 | ) | (63 | ) | ||||||||||
Gain on deconsolidation of TMAC (7) | — | (49 | ) | — | (49 | ) | ||||||||||||
Loss on debt repayment (8) | 1 | — | 3 | — | ||||||||||||||
La Quinua leach pad revision (9) | 17 | — | 17 | — | ||||||||||||||
Tax adjustments (10) | 7 | (37 | ) | 380 | 79 | |||||||||||||
Adjusted net income (loss) | $ | 202 | $ | 70 | $ | 486 | $ | 336 | ||||||||||
Batu Hijau operations | 69 | 43 | 195 | 165 | ||||||||||||||
Batu Hijau tax adjustments (10) | — | 13 | — | (14 | ) | |||||||||||||
Adjusted net income (loss) including Batu Hijau operations | $ | 271 | $ | 126 | $ | 681 | $ | 487 | ||||||||||
Net income (loss) per share, basic | $ | (0.67 | ) | $ | 0.42 | $ | (0.53 | ) | $ | 0.93 | ||||||||
Loss (income) attributable to Newmont stockholders from discontinued operations, net of taxes | ||||||||||||||||||
Holt property royalty obligation | 0.04 | (0.04 | ) | 0.14 | (0.07 | ) | ||||||||||||
Batu Hijau operations | (0.13 | ) | (0.08 | ) | (0.37 | ) | (0.32 | ) | ||||||||||
Loss on classification as held for sale | 1.08 | — | 1.08 | — | ||||||||||||||
Net income (loss) attributable to Newmont stockholders from continuing operations | 0.32 | 0.30 | 0.32 | 0.54 | ||||||||||||||
Impairment of investments, net of taxes | — | 0.04 | — | 0.13 | ||||||||||||||
Impairment of long-lived assets, net of taxes | — | 0.01 | — | 0.01 | ||||||||||||||
Restructuring and other, net of taxes | 0.01 | 0.02 | 0.03 | 0.03 | ||||||||||||||
Acquisition costs, net of taxes | 0.01 | 0.01 | 0.01 | 0.02 | ||||||||||||||
Loss (gain) on asset and investment sales, net of taxes | (0.01 | ) | (0.07 | ) | (0.21 | ) | (0.12 | ) | ||||||||||
Gain on deconsolidation of TMAC, net of taxes | — | (0.10 | ) | — | (0.10 | ) | ||||||||||||
Loss on debt repayment, net of taxes | 0.01 | — | 0.01 | — | ||||||||||||||
La Quinua leach pad revision | 0.03 | — | 0.03 | — | ||||||||||||||
Tax adjustments | 0.01 | (0.08 | ) | 0.73 | 0.15 | |||||||||||||
Adjusted net income (loss) per share, basic | $ | 0.38 | $ | 0.13 | $ | 0.92 | $ | 0.66 | ||||||||||
Batu Hijau operations | 0.13 | 0.08 | 0.37 | 0.32 | ||||||||||||||
Batu Hijau tax adjustments | — | 0.03 | — | (0.02 | ) | |||||||||||||
Adjusted net income (loss) including Batu Hijau operations per share, basic | $ | 0.51 | $ | 0.24 | $ | 1.29 | $ | 0.96 | ||||||||||
Net income (loss) per share, diluted | $ | (0.67 | ) | $ | 0.42 | $ | (0.53 | ) | $ | 0.93 | ||||||||
Loss (income) attributable to Newmont stockholders from discontinued operations, net of taxes | ||||||||||||||||||
Holt property royalty obligation | 0.04 | (0.04 | ) | 0.14 | (0.07 | ) | ||||||||||||
Batu Hijau operations | (0.13 | ) | (0.08 | ) | (0.37 | ) | (0.32 | ) | ||||||||||
Loss on classification as held for sale | 1.08 | — | 1.08 | — | ||||||||||||||
Net income (loss) attributable to Newmont stockholders from continuing operations | 0.32 | 0.30 | 0.32 | 0.54 | ||||||||||||||
Impairment of investments, net of taxes | — | 0.04 | — | 0.13 | ||||||||||||||
Impairment of long-lived assets, net of taxes | — | 0.01 | — | 0.01 | ||||||||||||||
Restructuring and other, net of taxes | 0.01 | 0.02 | 0.03 | 0.03 | ||||||||||||||
Acquisition costs, net of taxes | 0.01 | 0.01 | 0.01 | 0.02 | ||||||||||||||
Loss (gain) on asset and investment sales, net of taxes | (0.01 | ) | (0.07 | ) | (0.21 | ) | (0.12 | ) | ||||||||||
Gain on deconsolidation of TMAC, net of taxes | — | (0.10 | ) | — | (0.10 | ) | ||||||||||||
Loss on debt repayment, net of taxes | 0.01 | — | 0.01 | — | ||||||||||||||
La Quinua leach pad revision | 0.03 | — | 0.03 | — | ||||||||||||||
Tax adjustments | 0.01 | (0.08 | ) | 0.72 | 0.15 | |||||||||||||
Adjusted net income (loss) per share, diluted | $ | 0.38 | $ | 0.13 | $ | 0.91 | $ | 0.66 | ||||||||||
Batu Hijau operations | 0.13 | 0.08 | 0.37 | 0.32 | ||||||||||||||
Batu Hijau tax adjustments | — | 0.02 | — | (0.03 | ) | |||||||||||||
Adjusted net income (loss) including Batu Hijau operations per share, basic | $ | 0.51 | $ | 0.23 | $ | 1.28 | $ | 0.95 | ||||||||||
(1) | Loss (income) from discontinued operations relates to (i) adjustments in our Holt property royalty, presented net of tax expense (benefit) of $(9), $7, $(32) and $15, respectively, (ii) the operations of Batu Hijau, presented net of tax expense (benefit) of $90, $90, $258 and $194, respectively, and amounts attributed to noncontrolling interest income (expense) of $(79), $(66), $(229) and $(177), respectively, and (iii) the loss on classification as held for sale, which has been recorded on an attributable basis. For additional information regarding our discontinued operations, see Note 3 to our Condensed Consolidated Financial Statements. | |
(2) | Impairment of investments, included in Other income, net, represents other-than-temporary impairments on equity and cost method investments and does not relate to our core operations. Amounts are presented net of tax expense (benefit) of $-, $(10), $- and $(36), respectively. | |
(3) | Impairment of long-lived assets, included in Other expense, net, represents non-cash write-downs that do not impact our core operations. Amounts are presented net of tax expense (benefit) of $-, $(1), $(1) and $(2), respectively, and amounts attributed to noncontrolling interest income (expense) of $-, $-, $(1) and $-, respectively. | |
(4) | Restructuring and other, included in Other expense, net, represents certain costs associated with the Full Potential initiative announced in 2013, accrued legal costs in our Africa region during 2016 as well as system integration costs related to our acquisition of CC&V. Amounts are presented net of tax expense (benefit) of $(1), $(4), $(10) and $(9), respectively, and amounts attributed to noncontrolling interest income (expense) of $-, $(1), $(2) and $(3), respectively. | |
(5) | Acquisition costs, included in Other expense, net, represents adjustments made in 2016 to the contingent consideration liability from the acquisition of Boddington and costs associated with the acquisition of CC&V in 2015. Amounts are presented net of tax expense (benefit) of $(3), $(2), $(4) and $(5), respectively. | |
(6) | Loss (gain) on asset and investment sales, included in Other income, net, primarily represents the sale of our holdings in Regis Resources Ltd. in the first quarter of 2016, income recorded in the third quarter of 2016 associated with contingent consideration from the sale of certain properties in our North America segment during 2015, land sales of Hemlo mineral rights in Canada and the Relief Canyon mine in Nevada during the first quarter of 2015 and a gain related to the sale of our holdings in EGR in the third quarter of 2015. Amounts are presented net of tax expense (benefit) of $1, $30, $1 and $46, respectively. | |
(7) | Gain on deconsolidation of TMAC, included in Other income, net, resulted from the determination that TMAC should no longer be considered a variable interest entity during the third quarter of 2015. Amounts are presented net of tax expense (benefit) of $-, $27, $-, $27 expense (benefit), respectively. | |
(8) | Loss on debt repayment, included in Other income, net, represents the impact of the debt tender offer on our 2019 Notes and 2039 Notes during the first quarter of 2016 and our Term Loan paydown in the third quarter of 2016. Amounts are presented net of tax expense (benefit) of $-, $-, $(1) and $-, respectively. | |
(9) | La Quinua leach pad revision, included in Costs applicable to sales and Depreciation and amortization, represents a significant write off of the estimated recoverable ounces in our South America segment during the third quarter of 2016. Amounts are presented net of tax expense (benefit) of $(9), $-, $(9) and $-, respectively, and amounts attributed to noncontrolling interest income (expense) of $(25), $-, $(25) and $-, respectively. | |
(10) |
| Tax adjustments include movements in tax valuation allowance and tax adjustments not related to core operations. Second quarter and year to date tax adjustments were primarily the result of a tax restructuring and a loss carryback, both of which resulted in an increase in the Company’s valuation allowance on credits. |
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Contact
Newmont Mining Corp.
Media Contact
Omar Jabara, 303.837.5114
omar.jabara@newmont.com
or
Investor Contact
Meredith Bandy, 303-837-5143
meredith.bandy@newmont.com