Newmont Net Income Increases To $377 Million

GREENWOOD VILLAGE, CO - Newmont Mining Corporation reported second quarter adjusted net income of $377 million compared to $211 million in the prior year quarter. The Company anticipates improving operating costs during the remainder of the year, with higher ore grades and lower stripping at Batu Hijau, as well as higher processing plant availability now that regularly scheduled second quarter mill maintenance at a key processing facility in Nevada is complete.
In the second quarter of 2010, the Company reported equity gold production of 1.3 million ounces at costs applicable to sales of $492 per ounce on a co-product basis. Costs applicable to sales per gold ounce increased 16% in the second quarter of 2010 from 2009 due to higher costs in Nevada, at Yanacocha in Peru and at Batu Hijau in Indonesia, as well as higher-cost production from Boddington.
Nevada produced 420,000 equity ounces of gold at costs applicable to sales of $601 per ounce during the second quarter. Second quarter 2010 production was slightly higher than the year ago quarter due to higher underground production at Midas and Leeville, partially offset by lower mill throughput at Carlin and Twin Creeks and lower leach tons placed. Costs applicable to sales per ounce increased 9% in the second quarter of 2010 from 2009 due to additional surface mining costs related to the 2009 geotechnical event at Gold Quarry.
The Company continues to expect 2010 equity gold production from Nevada of approximately 1.6 to 1.725 million ounces at costs applicable to sales of between $590 and $630 per ounce.
Equity gold production at La Herradura in Mexico during the second quarter was 43,000 ounces at costs applicable to sales of $431 per ounce. Production increased 43% in the second quarter of 2010 from 2009 due to the commencement of production from the Soledad and Dipolos pits in January 2010. Costs applicable to sales per ounce increased 8% in the second quarter of 2010 from 2009 due to higher mining costs associated with two new pits.
The Company continues to expect La Herradura equity gold production of 140,000 to 150,000 ounces in 2010 with costs applicable to sales of between $400 and $430 per ounce.
South America
Equity gold production during the second quarter at Yanacocha in Peru was 181,000 ounces at costs applicable to sales of $389 per ounce. Production decreased 32% in the second quarter of 2010 from 2009 due to lower leach tons placed related to mine sequencing combined with lower mill ore grade. Costs applicable to sales per ounce increased 20% in the second quarter of 2010 from 2009 due to lower production, higher waste mining and maintenance costs, partially offset by higher by-product credits.
The Company continues to expect 2010 equity gold production at Yanacocha of between 750,000 and 810,000 ounces at costs applicable to sales near the high end of the outlook range of $360 and $400 per ounce, due primarily to higher royalties and workers participation costs as a result of higher realized gold prices.
Boddington continues to ramp-up to full production and produced 184,000 ounces of gold and 15 million pounds of copper during the second quarter at costs applicable to sales of $582 per ounce ($503 per ounce on a by-product basis(3)) and $1.55 per pound. Compared with the first quarter of 2010, gold and copper production increased by 16% and 13%, respectively.
The processing plant continues to perform in line with expectations with recoveries exceeding Feasibility Study expectations, and the high pressure grinding rolls and wet plant performing better than anticipated. However, production has been lower than expected as the Company has mined approximately 12% less contained gold, partially offset by 23% more contained copper, than originally modeled. As a result of lower gold production, higher direct mining costs and a stronger Australian dollar, gold production for 2010 is now expected between 750,000 and 825,000 ounces at costs applicable to sales of $475 to $550 per ounce (compared with an original outlook of 800,000 to 875,000 ounces at costs applicable to sales of $375 to $395 per ounce). A stronger Australian dollar accounts for approximately 25% of the expected increase in operating costs, with increased mining costs accounting for approximately 50% and lower volume and other factors accounting for the remainder. Copper production outlook for 2010 remains unchanged at between 65 and 75 million pounds, at costs applicable to sales now of between $1.55 and $1.75 per pound (compared with an original outlook of between $1.30 and $1.45 per pound).
For 2011, the Company expects gold production at Boddington of between 850,000 and 925,000 ounces at costs applicable to sales of between $475 and $525 per ounce as the operation begins its first year of steady-state production. It is still too early in the ramp-up process to conclusively determine any longer-term impacts of the lower gold ore grades experienced to date (with less than 2% of total reserves mined thus far).
At the Batu Hijau in Indonesia equity gold and copper production during the second quarter was 82,000 ounces and 65 million pounds, respectively, at costs applicable to sales of $294 per ounce and $0.66 per pound, respectively. Equity gold and copper production increased 49% and 27% in the second quarter of 2010 from 2009, respectively, due to higher grade ore from Phase 5, partially offset by lower recovery. Costs applicable to sales increased 28% and 14% for gold and copper, respectively, in the second quarter of 2010 from 2009 due to higher waste mining and milling costs. Production during the second quarter was adversely affected by unusually heavy rainfall.
The Company continues to expect 2010 equity gold and copper production at Batu Hijau of between 365,000 and 400,000 ounces, and between 265 and 290 million pounds, respectively. The Company continues to expect 2010 costs applicable to sales of between $265 and $285 per ounce and $0.75 and $0.85 per pound, respectively.
At the other Australia/New Zealand operations equity gold production during the second quarter was 256,000 ounces at costs applicable to sales of $549 per ounce. Equity gold production decreased 3% in the second quarter of 2010 from 2009 due to lower grade as a result of ore dilution and lower mill throughput as a result of maintenance at Tanami and lower ore grade at Jundee, partially offset by higher ore grade at Kalgoorlie and higher mill throughput at Waihi. Costs applicable to sales increased 10% in the second quarter of 2010 from 2009, primarily due to the stronger Australian dollar and lower production.
The Company continues to expect 2010 equity gold production at the Company's other Australia/New Zealand operations of between 1.06 and 1.16 million ounces at costs applicable to sales near the high end of our original outlook range of $530 to $570 per ounce.
Gold production during the second quarter at Ahafo in Ghana, Africa was 132,000 ounces at costs applicable to sales of $416 per ounce. Gold production was consistent with the prior year quarter with lower ore grade and recovery offset by higher mill throughput. Costs applicable to sales decreased 3% in the second quarter of 2010 from 2009 due to lower milling costs resulting from softer ore processed, partially offset by higher diesel costs.
Due to higher than projected production in the first half of 2010, the Company now expects 2010 gold production at Ahafo of between 500,000 and 530,000 ounces (up from between 460,000 and 500,000 ounces) at costs applicable to sales between $475 and $515 per ounce (lower than our original outlook of between $515 to $555 per ounce), based on higher grades than projected.
The company's address is 6363 South Fiddler's Green Circle, Suite 800, Greenwood Village, CO 80111, 303.863.7414, fax: 303.837.5837.