Newmont Reports Financial Performance Increase From Prior Year

DENVER, CO - Newmont CorporationPresident and Chief Executive Officer, Tom Palmer, said, “In the second quarter we delivered solid financial performance with $984 million in adjusted EBITDA and $388 million in free cash flow, both substantial increases over the prior year quarter. Our focus remains on ensuring the health, safety and wellbeing of our workforce and neighboring communities as we manage through the Covid pandemic. I am very proud of our workforce for the agility and resolve that they have demonstrated during these challenging times," said Tom Palmer, President and Chief Executive Officer. "We safely and efficiently executed restart plans at our mines previously in care and maintenance and Newmont’s world-class portfolio is well positioned to deliver an even stronger second half of 2020. The ongoing favorable gold price environment amplifies our free cash flow generation yet our discipline around capital allocation will not change as we continue to invest in profitable projects and provide shareholders industry-leading returns while maintaining a strong balance sheet.”

Attributable gold production1 decreased 21 percent to 1,255 thousand ounces from the prior year quarter primarily due to the sites in care and maintenance and the sale of Red Lake and Kalgoorlie, partially offset by higher grades at Porcupine and higher grades and increased throughput at Tanami. Gold CAS2 decreased 24 percent to $940 million from the prior year quarter due to the sites in care and maintenance and Gold CAS per ounce improved one percent to $748 per ounce primarily due to lower stockpile and leach pad inventory adjustments, partially offset by lower ounces sold.

Gold AISC3 increased eight percent to $1,097 per ounce from the prior year quarter primarily due to care and maintenance costs, partially offset by lower sustaining capital spend.

Attributable gold equivalent ounce (GEO) production from other metals increased to 138 thousand ounces primarily due to the impact of the blockade at Penasquito in North America last year, partially offset by the classification of copper as a by-product at Phoenix following the formation of Nevada Gold Mines, and lower grade and throughput at Boddington. CAS from other metals totaled $118 million for the quarter. CAS per GEO2 improved by 58 percent to $555 per ounce from the prior year quarter primarily due to higher sales at Penasquito, partially offset by higher mill maintenance costs at Boddington and the classification of copper as a by-product at Phoenix. AISC per GEO3 improved 41 percent to $974 per ounce primarily due to lower CAS from other metals.

Net income (loss) from continuing operations attributable to Newmont stockholders for the quarter was $412 million, an increase of $411 million from the prior year quarter primarily due to higher average realized gold prices, the increase in fair value of investments, lower operating costs and lower transaction and integration costs; partially offset by lower sales volumes from certain sites in care and maintenance and the sale of Kalgoorlie.

Adjusted net income was $261 million,compared to $92 million in the prior year quarter. The adjustments to net income primarily related to changes in the fair value of investments, COVID-19 specific costs, valuation allowance and other tax adjustments, and transaction and integration costs. Adjusted EBITDA improved 45 percent to $984 million for the quarter, compared to $679 million for the prior year quarter.

Revenue increased five percent from the prior year quarter to $2,365 million primarily due to higher average realized gold prices, partially offset by lower gold sales volumes. Average realized price for gold was $1,724, an increase of $407 per ounce over the prior year quarter; average realized price for copper was $2.91, an increase of $0.43 per pound over the prior year quarter; average realized price for silver was $14.70 per ounce, an increase of $0.50 per ounce over the prior year quarter; average realized price for lead was $0.75 per pound, a decrease of $0.01 per pound; average realized price for zinc was $0.70 per pound, and there were no zinc sales in the prior year quarter.

Capital expenditures decreased by 26 percent from the prior year quarter to $280 million, primarily due to lower spend from five operations being placed into care and maintenance, lower sustaining capital spend from the sale of Red Lake and Kalgoorlie, and reduced spending from the completion of Borden Underground, Ahafo Mill Expansion, and other projects in 2019. Development capital expenditures in 2020 primarily include advancing Tanami Expansion 2, Yanacocha Sulfides, Ahafo North and Subika mining method change, Musselwhite Materials Handling and conveyor installation, Eleonore Lower Mine Material Handling System, Quecher Main, and projects associated with the Company’s ownership interest in Nevada Gold Mines.

Consolidated operating cash flow from continuing operations increased 122 percent from the prior year quarter to $668 million due to higher realized gold prices, partially offset by lower sales volumes.

Newmont’s capital-efficient project pipeline supports stable production with improving margins and mine life. Funding for the current development capital projects Tanami Expansion 2 and Musselwhite Materials Handling has been approved and the projects are in execution. Additional projects not listed below represent incremental improvements to the Company's outlook.

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 1,460 meter hoisting shaft and supporting infrastructure to achieve 3.5 million tonnes 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 project is 95 percent complete; however, full commissioning has been delayed amidst the Covid pandemic as Musselwhite operations were previously on care and maintenance. The Company expects to commission the project upon completion of the Musselwhite conveyor system by the end of 2020.

In May, Newmont provided revised 2020 outlook as the Company's mines that were previously in care and maintenance began ramping up. Today, the Company is reaffirming its latest 2020 production outlook and is providing additional details on its regional and site-level guidance.

Newmont's 2020 attributable gold production remains at approximately 6.0 million ounces and the Company expects to produce approximately 1.0 million gold equivalent ounces from co-products. Gold CAS has been lowered to $760 per ounce, while gold AISC is unchanged at $1,015 per ounce on increased sustaining capital spend.

Newmont continues to progress the majority of its development and sustaining capital projects, including Tanami Expansion 2, developing the sub-level shrinkage mining method at Subika Underground and advancing laybacks at Boddington and Ahafo. However, total 2020 capital expenditure is expected to be approximately $1.4 billion due to reductions in non-essential activities and changes to the development capital schedule for Tanami Expansion 2, which defers some expenditure to 2021.

For exploration and advanced projects, approximately 80 percent of the Company’s exploration budget is allocated to near-mine activities and the majority of those programs continued through the second quarter at sites that were operating. Newmont's 2020 exploration and advanced project spend has been lowered to approximately $350 million as all Greenfield programs were suspended and infill drilling programs were on hold at operations in care and maintenance. The Company is currently ramping up drilling programs and preparing to restart Greenfields activities as soon as local restrictions are lifted in areas of Africa, Australia and South America. Advanced project study work for Yanacocha Sulfides and Ahafo North continues remotely.

Newmont will continue to maintain wide-ranging protective measures for its workforce and neighboring communities, including screening, physical distancing, deep cleaning, and avoiding exposure for at-risk individuals. If at any point the Company determines that continuing operations poses an increased risk to our workforce or host communities, it will reduce operational activities up to and including care and maintenance and management of critical environmental systems. Newmont’s 2020 outlook assumes operations continue throughout the remainder of the year without major interruptions.