Newmont Announces Full Year and Fourth Quarter 2018 Results

DENVER–(BUSINESS WIRE)–Newmont Mining Corporation (NYSE: NEM) (Newmont or the Company)
announced full year and fourth quarter 2018 results.

Full Year 2018 Summary

• Net income: Delivered GAAP net income from continuing
  operations attributable to stockholders of $280 million or $0.53 per
  diluted share; delivered adjusted net income¹ of $718
  million or $1.34 per diluted share, down $0.11 compared to the
  prior year
• EBITDA: Generated $2.6 billion in adjusted EBITDA²,
  a decrease of two percent from the prior year
• Cash flow: Reported consolidated cash flow from continuing
  operations of $1.8 billion and free cash flow³ of $805
  million
• Gold costs applicable to sales (CAS)⁴: Reported
  CAS of $708 per ounce, in line with the Company’s full year guidance
• Gold all-in sustaining costs (AISC)⁵: Reported
  AISC of $909 per ounce, beating the Company’s full year guidance
• Attributable gold production: Produced 5.1 million ounces of
  gold, in line with the Company’s full year guidance
• Portfolio improvements: Advanced Tanami Expansion 2 to
  definitive feasibility study and progressed the Tanami Power Project
  in Australia; completed the Cripple Creek & Victor (CC&V) concentrates
  project, reached commercial production at Twin Underground and
  Northwest Exodus, acquired 50 percent interest in Galore Creek, and
  progressed Long Canyon Phase 2 to feasibility study in North America;
  reached commercial production at Subika Underground, progressed the
  Ahafo Mill Expansion, and advanced Akyem Underground to prefeasibility
  study in Africa; reached first gold at Quecher Main, advanced
  Yanacocha Sulfides to definitive feasibility study, and completed the
  primary crusher at Merian in South America; divested royalty portfolio
  to Maverix Metals and formed strategic partnerships with Teck
  Resources Limited, Sumitomo Corporation, Evrim Resources, Miranda Gold
  and Orosur Mining.
• Financial strength: Ended the year with $3.4 billion cash on
  hand and net debt of $0.9 billion; an industry-leading balance sheet
  with investment-grade credit profile; declared dividends of $0.56 per
  share
• Outlook: Attributable production at 5.2 million ounces, CAS at
  $710 per ounce and AISC at $935 per ounce, unchanged from December 2018

“Newmont continued to deliver on its commitments in 2018, generating
$2.6 billion in adjusted EBITDA and $805 million in free cash flow, and
returning $400 million to shareholders through an industry-leading
dividend and share repurchases,” said Gary J. Goldberg, Chief Executive
Officer. “This performance gave us the means to complete expansions in
the US and Africa, advance projects and exploration on four continents,
and pursue an agreement to create the world’s leading gold business as
measured by assets, people, prospects and value. Strong operational
execution – including more than $600 million in Full Potential
sustainable cost and efficiency gains and recognition for leading
sustainability practices – was overshadowed, however, by the loss of
seven colleagues during the year.”

Fourth Quarter 2018 Summary

• Net loss: Delivered GAAP net loss from continuing operations
  attributable to stockholders of $(3) million or $0.00 per diluted
  share; delivered adjusted net income of $214 million or $0.40 per
  diluted share, up $0.01 compared to the prior year quarter
• EBITDA: Generated $759 million in adjusted EBITDA, up five
  percent from the prior year quarter
• Cash flow: Reported consolidated cash flow from continuing
  operations of $742 million and free cash flow of $473 million
• Gold CAS: Reported CAS decreased five percent to $658
  per ounce from the prior year quarter
• Gold AISC: Reported AISC decreased nine percent to $845
  per ounce from the prior year quarter
• Attributable gold production: Produced 1.44 million ounces of
  gold, an increase of eight percent from the prior year quarter

Full Year and Fourth Quarter 2018 Results

Net income (loss) from continuing operations attributable to
Newmont stockholders for the full year was $280 million or $0.53 per
diluted share, up $356 million from the prior year, primarily due to
lower income tax expense and a gain from the sale of our royalty
portfolio in June 2018, partially offset by increased impairments of
exploration and long-lived assets in North America and lower production
at various sites. Net loss from continuing operations attributable to
Newmont stockholders for the quarter was $(3) million or $0.00 per
diluted share, an increase of $546 million from the prior year quarter,
primarily due to lower income tax expense.

Adjusted net income was $718 million or $1.34 per diluted share
for the full year, compared to $774 million or $1.45 per diluted share
from the prior year. Adjusted net income for the quarter was $214
million or $0.40 per diluted share, compared to $206 million or
$0.39 per diluted share in the prior year quarter. The primary
adjustments to fourth quarter net income include $0.23 per diluted share
related to net tax adjustments and valuation allowances and $0.07 per
diluted share related to the impairment of an equity and cost method
investments.

Revenue for the full year decreased two percent to $7,253
million primarily due to lower production at various sites. Fourth
quarter revenue rose six percent to $2,048 million primarily due to
higher gold production at various sites, partially offset by lower
average realized metal prices.

Average realized price⁶ for gold was in line for the
full year at $1,260 per ounce and three percent lower for the quarter at
$1,233 per ounce, compared to the prior year. The average realized price
for copper for the full year was three percent lower at $2.74 per pound
and was 18 percent lower for the quarter at $2.62 per pound.

Gold CAS rose two percent to $708 per ounce for the full year,
primarily due to lower ounces sold, higher stockpile and leach pad
inventory adjustments, and higher oil prices. Gold CAS decreased five
percent to $658 per ounce for the quarter due to higher ounces sold at
Ahafo and lower power costs in Africa.

Gold AISC rose two percent to $909 per ounce for the full year,
primarily due to higher CAS per ounce. Gold AISC decreased nine percent
to $845 per ounce for the quarter, primarily due to higher ounces sold
and lower sustaining capital spend.

Attributable gold production decreased three percent to 5.10
million ounces for the full year primarily due to lower grades at
various sites and lower leach tons placed at Carlin, Phoenix, CC&V and
Yanacocha, partially offset by higher grades and recovery at Tanami and
Ahafo. Production for the fourth quarter rose eight percent to 1.44
million ounces primarily due to higher grades and recovery at CC&V and
Ahafo, partially offset by lower grades at KCGM.

Attributable copper production decreased four percent to 49,000
tonnes for the full year, primarily due to lower grades at Phoenix and
Boddington. For the quarter, production was in line at 11,000 tonnes.

Copper CAS increased 15 percent to $1.69 per pound for the full
year and 10 percent to $1.78 per pound for the quarter, primarily due to
lower production, higher strip ratio, and higher oil prices at
Boddington.

Copper AISC increased 12 percent to $2.02 for the full year,
primarily due to higher CAS per ounce. For the quarter, AISC was in line
at $2.09.

Capital expenditures⁷ increased by 19 percent to
$1,032 million for the full year with increased investment in Quecher
Main, Subika Underground, the Ahafo Mill expansion, and Ahafo North. For
the quarter, capital expenditures decreased by 13 percent to $269
million, primarily due to the completion of Subika Underground.

Consolidated operating cash flow from continuing operations decreased
14 percent to $1,837 million for the full year, primarily due to lower
sales volumes and unfavorable changes in working capital, partially
offset by lower interest and higher realized gold prices. Operating cash
flow for the quarter was in line at $742 million. Free cash flow
decreased 37 percent to $805 million for the full year due to
unfavorable working capital changes and higher capital expenditures on
development projects primarily at Yanacocha and Ahafo. Free cash flow
increased eight percent to $473 million for the quarter, primarily due
to the completion of underground development projects in North America
in the second quarter and Africa during the fourth quarter.

Balance sheet ended the quarter with $3.4 billion cash on hand, a
leverage ratio of 0.3x net debt to adjusted EBITDA and one of the
strongest balance sheets in the mining sector. The Company is committed
to maintaining an investment-grade credit profile.

Shareholder returns: Delivered a sustainable annual dividend of
$0.56 per share and executed share repurchases, resulting in
approximately $400 million returned to shareholders in 2018.

Corporate update

On January 14, 2019, the Company entered into a definitive agreement (as
amended by the first amendment to the arrangement agreement, dated as of
February 19, 2019) to acquire all outstanding common shares of Goldcorp
Inc. (Goldcorp) in a primarily stock transaction. Under the terms of the
agreement, Goldcorp shareholders will receive 0.3280 shares of Newmont’s
common stock and $0.02 in cash for each Goldcorp common share they own,
for a total transaction value of approximately $10 billion as of the
announcement date on January 14, 2019. The transaction, which is subject
to approval by both Newmont and Goldcorp shareholders, and other
customary conditions and regulatory approvals, is expected to close in
the second quarter of 2019⁸. Upon closing, the combined
company will be known as Newmont Goldcorp⁹.

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 Ahafo Mill Expansion, Quecher
Main and Tanami Power projects has been approved and these projects are
in execution. Additional projects represent incremental improvements to
production and cost guidance. Internal rates of return (IRR) on these
projects are calculated at a $1,200 gold price.

• Ahafo Mill Expansion (Africa) is designed
  to maximize resource value by improving production margins and
  accelerating stockpile processing. The project also supports
  profitable development of Ahafo’s highly prospective underground
  resources. Both first production and commercial production are
  expected in the second half of 2019. The expansion is expected to
  increase average annual gold production by between 75,000 and 100,000
  ounces per year for the first five years beginning in 2020. Capital
  costs for the project are estimated between $140 and $180 million with
  expenditure of approximately $35 to $45 million in 2019. The project
  has an IRR of more than 20 percent.

  The Ahafo Mill
  Expansion, together with the Company’s recently completed Subika
  Underground project, will improve Ahafo’s production to between
  550,000 and 650,000 ounces per year for the first five full years of
  production (2020 to 2024). During this period Ahafo’s CAS is expected
  to be between $650 and $750 per ounce and AISC is expected to be
  between $800 and $900 per ounce. This represents average production
  improvement of between 200,000 and 300,000 ounces at CAS improvement
  of between $150 and $250 per ounce and AISC improvement of $250 to
  $350 per ounce, compared to 2016 actuals.

• Quecher Main (South America) will add
  oxide production at Yanacocha, leverage existing infrastructure and
  enable potential future growth at Yanacocha. Commercial production
  expected in the second half of 2019. Quecher Main extends the life of
  the Yanacocha operation to 2027 with average annual gold production of
  approximately 200,000 ounces per year between 2020 and 2025 (100
  percent basis). During the same period, incremental CAS is expected to
  be between $750 and $850 per ounce and AISC between $900 and $1,000
  per ounce. Capital costs for the project are expected to be between
  $250 and $300 million with expenditure of $95 to $105 million in 2019.
  The project IRR is expected to be greater than 10 percent.
• Tanami Power (Australia) will lower
  Tanami power costs by approximately 20 percent beginning in 2019,
  mitigate fuel supply risk and reduce carbon emissions by 20 percent.
  The project includes the construction of a 450 kilometer natural gas
  pipeline connecting the Tanami site to the Amadeus Gas Pipeline, and
  construction and operation of two on-site power stations. The gas
  supply, gas transmission and power purchase agreements are for a 10
  year term with options to extend. The project is expected to result in
  net cash savings of approximately $34 per ounce beginning in 2019.
  Capital costs are estimated between $225 and $275 million with annual
  cash lease payments over a 10 year term beginning in 2019. The project
  IRR is expected to be greater than 50 percent at $0.75 AUD.

Outlook

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

Attributable gold production is expected to be 5.2 million ounces
in 2019, primarily driven by a full year of higher grade production from
the recently completed Subika Underground project in Africa. Production
is expected to be 4.9 million ounces in 2020 and longer-term production
is expected to remain stable at between 4.4 and 4.9 million ounces per
year through 2023 excluding development projects which have yet to be
approved.

• North America production is expected to be 1.9 million ounces in 2019
  as higher grade production from Northwest Exodus and Twin Underground
  are offset by the depletion of Silverstar ore at Carlin and lower gold
  production at Phoenix as mining shifts to higher copper grade ore from
  the Bonanza pit. Production remains at 1.9 million ounces in 2020 and
  2021 as higher grades at Long Canyon following the stripping campaign
  help offset lower grades at CC&V. North American production may be
  impacted by approximately 70,000 ounces following the Gold Quarry wall
  slip but mine plan optimization work is ongoing. The Company continues
  to pursue profitable growth opportunities at Carlin, Long Canyon, CC&V
  and Galore Creek.
• South America production is expected to be 650,000 ounces in 2019 as
  productivity improvements at Merian offset the transition to harder
  ore. Production is expected to decrease to 560,000 ounces in 2020 and
  450,000 ounces in 2021 as the Tapado Oeste pit and Yanacocha laybacks
  are mined out and Merian transitions from saprolite to hard rock. The
  Company continues to advance near-mine growth opportunities at Merian
  and both oxide and sulfide potential at Yanacocha.
• Australia production is expected to be 1.5 million ounces in 2019 with
  higher grades and throughput and productivity gains at Tanami, offset
  by lower mining rates at KCGM following the wall slips and the
  continuation of stripping at Boddington. Production is expected to be
  1.5 million ounces in 2020 and 1.6 million ounces in 2021 as
  Boddington accesses higher grade ore. KCGM’s near-term production has
  been lowered due to the wall slips, but optimization work continues to
  recover the impacted ounces as part of the broader Golden Mile Growth
  Study. The Company continues to advance studies for a second expansion
  at Tanami and expects to reach a full-funds decision in the second
  half of 2019.
• Africa production is expected to be 1.1 million ounces in 2019 with a
  full year of production from Subika Underground, higher grades from
  the Subika open pit and improved mill throughput in the second half of
  the year with the mill expansion. Production is expected to be 930,000
  ounces in 2020 with lower grades at Akyem and Subika open pit which
  are partially offset by higher underground grades at Ahafo and a full
  year of production from the Ahafo Mill Expansion. In 2021, production
  is expected to be 1 million ounces as Akyem reaches higher grades near
  the bottom of the pit. The company continues to advance the Ahafo
  North project and other prospective surface and underground
  opportunities.

Gold cost outlook – CAS is expected to be $710 per ounce
for 2019 following higher production at Ahafo, lower mining costs at
Yanacocha and lower operational costs at Tanami with the completion of
the Tanami Power Project. The Company continues to implement Full
Potential cost and efficiency improvements and advance technology
initiatives to offset inflation and input cost pressures. CAS is
expected to be $750 per ounce for 2020 and between $690 and $740 per
ounce longer-term through 2023. AISC is expected to be $935 per ounce in
2019 on improved CAS in Africa and South America partially offset by
higher sustaining capital. AISC is expected to be $975 per ounce in 2020
and between $875 and $975 longer-term through 2023. Future Full
Potential savings and profitable ounces from projects that are not yet
approved represent additional upside not currently captured in guidance.

• North America CAS is expected to be $785 per ounce in 2019 as lower
  leach grades drive inventory cost increases at CC&V which are
  partially offset by cost improvements across the other North American
  operations. CAS is expected to be $760 per ounce in 2020 and $790 per
  ounce in 2021 with higher production at Twin Creeks as the Turquoise
  Ridge Joint Venture (TRJV) optimization project ramps up. AISC is
  expected to be $975 per ounce in 2019 on improved unit CAS. AISC is
  expected to be $925 per ounce in 2020 and 2021. North American CAS and
  AISC guidance may be impacted by the Gold Quarry wall slip and mine
  plan optimization work is ongoing.
• South America CAS is expected to be $640 per ounce in 2019 driven by a
  lower stripping ratio at Yanacocha partially offset by higher labor
  and mill maintenance costs at Merian. CAS is expected to increase to
  $825 per ounce in 2020 with higher inventory costs and strip ratio at
  Yanacocha. CAS is expected to be $830 per ounce in 2021 as Merian
  fully transitions into harder rock which is partially offset by lower
  operating costs at Yanacocha as the oxide mill shuts down. AISC is
  expected to be $800 per ounce in 2019 due to lower CAS and sustaining
  capital. AISC is expected to be $995 per ounce in 2020 and $1,000 per
  ounce in 2021 on higher CAS and increases in sustaining capital.
• Australia CAS is expected to be $775 per ounce in 2019 driven by
  increased stripping at Boddington and the drawdown of lower grade
  stockpiles at KCGM, partially offset by higher production and lower
  power costs at Tanami from switching to natural gas. CAS is expected
  to be $750 per ounce in 2020 and $645 per ounce in 2021 as Boddington
  reaches higher grades. AISC is expected to be $945 per ounce in 2019
  on increased CAS. AISC is expected to be $925 per ounce in 2020 and
  $800 per ounce in 2021.
• Africa CAS is expected to be $570 per ounce in 2019 due to higher
  grades from Subika Underground and Subika open pit and the Ahafo Mill
  Expansion coming online. CAS is expected to be $660 per ounce in 2020
  and $625 per ounce in 2021 with mine sequencing at the Ahafo and Akyem
  pits driving production changes. AISC is expected to be $735 per ounce
  in 2019 on improved unit CAS, partly offset by higher sustaining
  capital for the Ahafo tailing storage facility expansion. AISC is
  expected to be $830 per ounce in 2020 and $780 per ounce in 2021.

Copper – Attributable production is expected to be 45,000
tonnes in 2019 and 2020 as Phoenix reaches higher grade copper ore from
the Bonanza pit which is offset by lower production at Boddington.
Copper production increases to between 45,000 and 65,000 tonnes
longer-term through 2023 driven primarily from higher grades at
Boddington following completion of the next stripping campaign. CAS is
expected to rise to $2.05 per pound in 2019 and $2.10 per pound in 2020
due to higher stripping at Boddington. CAS is expected to improve to
$1.55 to $1.75 per pound longer-term through 2023 as production at
Boddington increases offsetting lower copper grades at Phoenix. AISC is
expected to rise to $2.45 per pound in 2019 on increased CAS. AISC is
expected to be $2.55 per pound in 2020 and $1.80 to $2.10 per pound
longer-term.

Capital – Total consolidated capital is expected to be $1,070
million for 2019 and $730 million for 2020. Development capital of $390
million in 2019 includes investments in the Tanami Power Project in
Australia, Ahafo Mill Expansion in Africa, Quecher Main in South
America, and the TRJV third shaft in North America and expenditures to
advance studies for future projects. Development capital is expected to
be $70 million in 2020 and approximately $50 million longer-term until
additional projects are approved. Sustaining capital is expected to be
$680 million for 2019, $660 million for 2020 and between $450 and $550
million per year longer-term to cover infrastructure, equipment and
ongoing mine development.

Consolidated expense outlook – Interest expense is
expected to be $215 million for 2019 from leases related to the Tanami
Power Project and lower capitalized interest. Investment in exploration
and advanced projects is expected be $430 million in 2019 with increased
near-mine and greenfield exploration spend across all regions and higher
advanced project spend in North America. 2019 outlook for general &
administrative costs is stable at $245 million and guidance for
depreciation and amortization is expected to be $1,370 million as Subika
Underground and the Tanami Power Project come into service.

Assumptions and sensitivities – Newmont’s outlook assumes $1,200
per ounce gold price, $2.50 per pound copper price, $0.75 USD/AUD
exchange rate and $65 per barrel WTI oil price. Assuming a 35% portfolio
tax rate, $100 per ounce increase in gold price would deliver an
expected $335 million improvement in attributable free cash flow.
Similarly, a $10 per barrel reduction in the price of oil and a $0.05
favorable change in the Australian dollar would deliver an expected $25
million and $45 million improvement in attributable free cash flow,
respectively. These estimates exclude current hedge programs; please
refer to Newmont’s Form 10-K which was filed with the SEC on February
21, 2019 for further information on hedging positions.

2019 Outlook^a

Contacts

Newmont Mining Corporation
Investor
Contact
Jessica Largent, 303-837-5484
jessica.largent@newmont.com

Media
Contact
Omar Jabara, 303-837-5114
omar.jabara@newmont.com

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