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African mining indaba 2012
The document provides an overview of Newmont Mining Corporation's African Mining INDABA 2012 conference presentation. It discusses Newmont's growth plans in Africa through 2017, including expanding gold production at its Ahafo and Akyem mines in Ghana. Newmont reports preliminary 2011 results for Ahafo that exceeded its 2010 production and costs. Construction is underway at Akyem, with production expected to begin between 2013-2014 at an annual rate of 350,000-450,000 ounces of gold at a cash cost of $450-550 per ounce.
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African mining indaba 2012
- 1. African Mining INDABA2012 John Seaberg, Vice President, Investor Relations February 8, 2012
- 2. Cautionary Statement CautionaryStatement Regarding 2011 Preliminary Results and Operating Highlights: We caution you that, whether or not expressly stated, all measures of the Company's fourth quarter and 2011 financial results and condition contained in this news release, including production, sales, average realized price, costs applicable to sales and capital expenditures, are preliminary and reflect our expected 2011 results as of the date of this news release. Actual reported fourth quarter and 2011 results are subject to management's final review as well as audit by the Company's independent registered accounting firm and may vary significantly from those expectations because of a number of factors, including, without limitation, additional or revised information and changes in accounting standards or policies or in how those standards are applied. For a discussion of factors that may adversely affect our financial results and condition, see the Company’s 2010 Annual Report on Form 10-K, filed on February 24, 2011, with the Securities and Exchange Commission (“SEC”), as well as the Company’s other SEC filings, available on the SEC's website at www.sec.gov. The Company will provide additional discussion and analysis and other important information about its fourth quarter and 2011 financial results and condition when it reports actual results on February 24, 2012. Cautionary Statement Regarding Forward Looking Statements, Including 2012 Outlook and 2017 Goals and Growth Plan: This presentation 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 those sections and other applicable laws. Those forward-looking statements include (without limitation) estimates and expectations of, and statements regarding: (i) the Company’s strategy, outlook and plans; (ii) future equity gold and equity copper production; (iii) future operating, sales and other costs; (iv) future capital expenditures; (v) project returns; (vi) project start dates, ramp up, life, pipeline timelines, including commencement of mining, drilling and stage gate advancement and expansion opportunities; (vii) potential ounces or tons of reserves, NRM and potential resources; (viii) exploration pipeline, potential or upside, opportunities, growth and growth potential; (ix) dividend payments and increases; (x) future liquidity, cash and balance sheet expectancy; and (xi) other financial outlook for the Company’s operations and projects including without limitation, Ahafo and Akyem. Those forward-looking statements include (without limitation) statements that use forward-looking terminology such as “may”, “will”, “expect”, “predict”, “anticipate”, “believe”, “continue”, “potential”, “target”, “goal”, “opportunity”, “outlook”, or the negative or other variations of those terms or comparable terminology. Estimates or expectations of future events or results are based upon certain assumptions, which may prove to be incorrect. Those assumptions include (without limitation): (i) there being no significant change to current geotechnical, metallurgical, hydrological and other physical conditions; (ii) permitting, development, operations and expansion of the Company’s projects being consistent with current expectations and mine plans; (iii) political developments in any jurisdiction in which the Company conducts business being consistent with its current expectations; (iv) certain exchange rate assumptions for the Australian dollar to the U.S. dollar, as well as the other exchange rates being approximately consistent with current levels; (v) certain price assumptions for gold, copper and oil; (vi) prices for key supplies being approximately consistent with current levels and such supplies otherwise being available on bases consistent with the Company’s current expectations; and (vii) the accuracy of our current mineral reserve and mineral resource estimates and exploration information. Where the Company expresses or implies an expectation or belief as to future events or results, that expectation or belief is expressed in good faith and is believed to have a reasonable basis. However, forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed, projected or implied by the “forward-looking statements”. Those risks, uncertainties and other factors include (without limitation): (i) gold and other metals price volatility; (ii) currency fluctuations; (iii) increased capital and operating costs, and scarcity of and competition for required labor and supplies; (iv) variances in ore grade or recovery rates from those assumed in mining plans; (v) operating or technical difficulties; (vi) political and operational risks; (vii) community relations, conflict resolution and outcome of projects or oppositions; and (viii) governmental regulation and judicial outcomes. For a more detailed discussion of such risks and other factors, see the Company’s 2010 Annual Report on Form 10-K, filed on February 24, 2011, as well as the Company’s other SEC filings. These forward-looking statements are not guarantees of future performance, given that they involve risks and uncertainties. The Company does not undertake any obligation to release publicly revisions to any forward-looking statement 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. In addition, some of the statements in this presentation are based on assumptions or methodologies (such as commodity prices) or subject to cautionary statements that are discussed in the notes found at the end of this presentation. Newmont Mining Corporation | Africa Mining INDABA 2012 | www.newmont.com 2 February 8, 2012
- 3. Building on StrongOperating Performance Compelling Combination of Growth, Returns and Exploration Upside • Gold production growth potential to ~7 Moz by 2017 (~35%)1 Growth • Copper production to double over same period to 400 Mlbs Project Returns • Competitive returns across the pipeline • Potential to add equivalent of current Au and Cu reserves (93.5 Moz Exploration Upside gold and 9.4 Blbs copper) over the next decade2 Balance Sheet • Substantial liquidity and operating cash flow to fund growth and Strength return capital to shareholders Gold Price-Linked • Industry leading dividend yield Dividend3 • Dividend enhanced to increase payout at higher gold prices End Notes for this presentation begin on slide 22 Newmont Mining Corporation | Africa Mining INDABA 2012 | www.newmont.com 3 February 8, 2012
- 4. Newmont 2011-2017 Attributable Projected Pipeline Growth, Net of Decline 8.0 2017 Forecasted Potential Africa: Production ~0.8 Moz (Moz)6 7.0 ~0.3 Other APAC: ~0.4 Akyem S America: ~0.4 Moz ~1.3 Moz ~0.2 Subika 6.0 ~100 Mlbs ~0.2 Ahafo Mill ~0.2 Aust. Exp. N America ~0.3 Merian ~5.2 Moz4 Decline S America ~0.2 Yan Exp. N America: 5.0 Africa Decline Attributable Gold Production (Moz) ~0.7 Moz ~0.3 Cerro Quilish ~0.6 Moz (~0.3 Moz) APAC ~50 Mlbs ~0.4 Conga Decline ~0.2 Long Canyon Africa 4.0 APAC (~0.7 Moz) Decline ~0.6 NV Exp ~1.9 Moz (~0.4 Moz) (~0.2 Moz) Progress potentially dependent on outcomes of 3.0 current dialogue with Peruvian government and S America community authorities5 Base: ~0.70 Moz ~3.6 2.0 N America 1.0 ~2.0 Moz 2011 2017 0.0 Newmont Mining Corporation | Africa Mining INDABA 2012 | www.newmont.com 4 February 8, 2012
- 5. 2012 Outlook and2011 Preliminary Operating Results Outlook Highlights 2011 Outlook 2011 Actual8 2012 Outlook9 Attributable Gold Production (Moz) 5.1 – 5.3 5.2 5.0 – 5.2 Consolidated Gold CAS ($/oz) $560 – $590 $592 $625 – $675 Attributable Copper Production (Mlbs) 190 – 220 206 150 – 170 Consolidated Copper CAS ($/lb) $1.25 – $1.50 $1.26 $1.80 – $2.20 Capital Expenditures7 ($M) $2,700 – $2,963 $3,000 – $3,300 $3,300 Preliminary Operating Results Q4’11 gold production of 1.3Moz at $606/oz Q4’11 copper production of 48Mlbs at $1.58/lb 2011 average realized gold and copper price of $1,563/oz and $3.54/lb, Q4’11 average realized gold and copper price of $1,670 and $3.41/lb – Translates to an expected quarterly dividend payment of $0.35/sh in March 201210 Newmont Mining Corporation | Africa Mining INDABA 2012 | www.newmont.com 5 February 8, 2012
- 6. Exploration Upside Strong Pipelineto Support the Reserve Base in the Growth Plan Potential to add more than equivalent of current Non Reserve Mineralization 11 Reserves Gold and Copper reserves over the next decade Reserves Long Canyon Greater Gold Quarry Phoenix Cu Leach Region Gold Copper Boddington Leeville/Turf Gold Quarry (Moz) (Blb) Fimiston Tanami Leeville/Turf Africa 17.20 - Elang Yanacocha Verde Phoenix Mike Chaquicocha UG Boddington APAC 31.41 6.12 Fiberline Subika Expansion Tanami North 33.49 1.64 Greater Phoenix Ahafo America La Carpa Merian TRJV Yanacocha South 11.40 1.66 Copper Basin Cerro Quilish America 37.5 Moz Au12 93.5 Moz Au12 3.7 Blb Cu12 9.4 Blb Cu12 Newmont Mining Corporation | Africa Mining INDABA 2012 | www.newmont.com 6 February 8, 2012
- 7. Gold Price-Linked Dividend13 Committedto Returning Capital to Shareholders Dividend increases / decreases Dividend increases / Dividend increases / decreases by $0.40/share $5.00 by $0.20/share for every $100/oz decreases by for every $100/oz change in the gold price change in the gold price $0.30/share for every $4.70 $100/oz change in $4.50 gold price Yield = ~7.9%, or 1st $4.30 Quartile S&P 500 DY16 $4.00 Annualized Dividend per Share ($) $3.90 $3.50 $3.50 Yield = ~4.5%, or 2nd Quartile S&P 500 DY15 $3.10 $3.00 $2.70 Yield = ~2.9% or 3rd $2.50 Quartile S&P 500 DY14 $2.30 $2.00 $2.00 $1.70 $1.50 $1.40 $1.20 $1.00 $1.00 $0.80 $0.60 $0.50 $0.40 $0.00 $1,100 $1,200 $1,300 $1,400 $1,500 $1,600 $1,700 $1,800 $1,900 $2,000- $2,100- $2,200- $2,300- $2,400- $2,500 -$1,199 -$1,299 -$1,399 -$1,499 -$1,599 -$1,699 -$1,799 -$1,899 -$1,999 $2,099 $2,199 $2,299 $2,399 $2,499 -$2,599 Previous Dividend Policy Trailing Qtr Avg. Realized Gold Price ($/oz) Enhanced Dividend Policy Newmont Mining Corporation | Africa Mining INDABA 2012 | www.newmont.com Previous Dividend Policy Enhanced Dividend Policy 7 February 8, 2012
- 8. Leadership Committed to TotalShareholder Returns Newmont vs. Peers and Gold, April 7, 2011 – Present17 NEM Yield vs. Peers, US 10 Year Bond and S&P 50018 NEM @ $60/sh, $2,000 Au NEM @ $60/sh, $1,700 Au Newmont vs. Peers and Gold, Sept 19, 2011 – Present17 Newmont paid a $0.35/share dividend in Q4’11, vs. a peer average dividend of ~$0.11/share19 In absolute terms, Newmont paid ~$170M in dividends in Q4’11, vs. a peer average of ~$90M20 Newmont Mining Corporation | Africa Mining INDABA 2012 | www.newmont.com 8 February 8, 2012
- 9. Africa Region 2011 PreliminaryResults and 2012 Outlook21 Key Statistics Ahafo Gold Reserves (Moz) 10.0 Ahafo Reserve Grade (gpt) 2.1 Akyem Gold Reserves (Moz) 7.2 Akyem Reserve Grade (gpt) 1.8 Africa Gold Reserves (Moz) 17.2 Africa Reserve Grade (gpt) 2.0 Reserves as of December 31, 2010 2010 2011 Preliminary 2012 Change Actual Results Outlook Ahafo Attributable Gold Production (Koz) 545 566 + 4% 570 - 600 Ahafo Gold Consolidated CAS ($/oz) $450 $474 + 5% $500 - $550 Ahafo Consolidated CapEx ($M) $109 $116 + 7% $240 - $270 Akyem Capital Expenditures22 ($M) $70 $248 + 254% $370 - $420 Newmont Mining Corporation | Africa Mining INDABA 2012 | www.newmont.com 9 February 8, 2012
- 10. Ghana Newmont Strategically Locatedon Main Gold Belts Newmont Mining Corporation | Africa Mining INDABA 2012 | www.newmont.com 10 February 8, 2012
- 11. Africa Akyem Newmont MiningCorporation | Africa Mining INDABA 2012 | www.newmont.com 11 February 8, 2012
- 12. Africa Akyem Project Description A project that doubles Ghanaian gold production and offers future upside exploration upside Key Statistics Estimates (Attributable to NEM) Annual Production (Koz)23: 350 - 450 Koz CAS ($/oz)23: $450 - $550 Anticipated Start Date: ~2013 - 2014 Initial Capex ($B): $0.9 - $1.1 Current Status H2 2011: Mechanical (CIL Tanks) & concrete work associated with the primary crusher and mill foundations commenced H2 2012: Construction progress > 50% H2 2012: Mining activities commence Newmont Mining Corporation | Africa Mining INDABA 2012 | www.newmont.com 12 February 8, 2012
- 13. Africa Akyem Significant Underground Potential 7 Moz pit 8.3m at 7.6g/t 27m at 7g/t 21.1 at 4g/t 15.4m at 11g/t 15.3m at 6.9g/t 20m at 6g/t 26m at 5.7g/t 32m at 10g/t 19.8m at 6g/t Exploring for parallel structures and district targets Preliminary modeling and evaluation of deep resource Newmont Mining Corporation | Africa Mining INDABA 2012 | www.newmont.com 13 February 8, 2012
- 14. Africa Ahafo Mill Expansion Project Description A project that increases Ahafo gold production through expansion of existing mill facilities Key Statistics Estimates Mill expansion could increase capacity by 50% (from 7.5 to ~12.5 Mtpa 1st Phase) Adds flexibility to current operations Current Status Evaluating optimum increase in mill throughput and the ability to process multiple ore blends H2 2012: Advance scoping and pre-feasibility studies March 31 - April 1, 2011 Newmont Mining Corporation | Africa Mining INDABA 2012 | www.newmont.com 14 February 8, 2012
- 15. Africa Subika Underground Project Description A project that extends Ahafo’s operating life and provides a stepping stone to other potential underground projects in Ghana Key Statistics Estimates Current resource of approximately 5Moz Advanced development project, planned production of 2Mtpa, yielding 250-300koz gold by 2017 Current Status Test stoping, infrastructure development and diamond drilling on-going on site March 31 - April 1, 2011 Newmont Mining Corporation | Africa Mining INDABA 2012 | www.newmont.com 15 February 8, 2012
- 16. Ahafo North Optimizing Wingspan Project Description A longer term project that could provide a significant contribution to long term regional production Key Statistics Estimates Currently 3.2Moz of gold reserves concentrated in three core, contiguous deposits Potential to significantly expand NRM Current Status Infill and exploration drilling underway Confirm reserves, conduct study to advance metallurgy, geotechnical hydrological understanding Newmont Mining Corporation | Africa Mining INDABA 2012 | www.newmont.com 16 February 8, 2012
- 17. Financial Strength andFlexibility Delivering Per Share Leadership24 Gold Reserves per Share Attributable Gold Production per Share 200 12.0 2008 2009 2010 2008 2009 2010 180 10.0 160 140 8.0 120 100 6.0 80 4.0 60 40 2.0 20 0 0.0 NEM ABX AEM GG KGC IMG NEM ABX AEM GG KGC IMG Consolidated OCF per Share Adjusted Earnings per Share $7.00 $4.50 2008 2009 2010 2008 2009 2010 $6.00 $4.00 $5.00 $3.50 $4.00 $3.00 $3.00 $2.50 $2.00 $2.00 $1.00 $1.50 $0.00 $1.00 NEM ABX AEM GG KGC IMG -$1.00 $0.50 -$2.00 $0.00 NEM ABX AEM GG KGC IMG -$3.00 Newmont Mining Corporation | Africa Mining INDABA 2012 | www.newmont.com 17 February 8, 2012
- 18. Newmont: Summary/Conclusion ~35%Potential increase in attributable gold production by 2017 African region expected to double production by 2017 Industry-leading returns on invested capital Exploration upside as large as current reserve base Strong balance sheet with significant financial flexibility Industry-leading dividend yield Newmont Mining Corporation | Africa Mining INDABA 2012 | www.newmont.com 18 February 8, 2012
- 19.
- 20. Akyem Community Development Identifying opportunities and building Local Business capacity to maximize procurement from local Akyem businesses Ensuring decision-making and sustainable development through engagement with the Akyem Social Responsibility Forum (SRF) –Created long term vision for communities –Completed local employment agreement –Identified development initiatives for 2011 Ongoing stakeholder engagement programs – Schools: building understanding with key change agents – Regional Minister, Departments and District Assemblies: monthly updates – Media: quarterly updates – Local stakeholder groups (farmers, churches etc.): quarterly updates – Paramountcy, Chiefs, Queen Mothers, Sub-chiefs: monthly/weekly meetings Community development through construction of infrastructure and capacity building initiatives Newmont Mining Corporation | Africa Mining INDABA 2012 | www.newmont.com 20 February 8, 2012
- 21. 2012 Outlook asof January 17, 20128 Attributable Productiona Consolidated CAS Consolidated Capital Attributable Capital Region (Kozs, Mlbs) ($/oz, $/lb) Expenditures ($M) Expenditures ($M) Nevada 1,725 - 1,800 $575 - $625 $650 - $750 $650 - $750 La Herradura 200 - 240 $460 - $510 $80 - $130 $80 - $130 North America 1,900 - 2,000 $570 - $630 $780 - $830 $780 - $830 Yanacocha 650 - 700 $480 - $530 $530 - $580 $270 - $310 La Zanja 40 - 50 n/a - - Conga b - - $1,150 - $1,250 $600 - $650 South America 700 - 750 $480 - $530 $1,750 - $1,950 $800 - $900 Boddington 750 - 800 $800 - $850 $215 - $245 $215 - $245 Other Australia/NZ 980 - 1,030 $810 - $860 $375 - $400 $375 - $400 Batu Hijau e 45 - 55 $800 - $850 $200 - $230 $95 - $105 Consolidated Expenses Attributable Expenses Description ($M) ($M) Asia Pacific 1,775 - 1,885 $800 - $850 $800 - $900 $700 - $800 General & Administrative $210 - $230 $210 - $230 Ahafo 570 - 600 $500 - $550 $240 - $270 $240 - $270 Interest Expense $240 - $260 $230 - $250 Akyem - - $370 - $420 $370 - $420 DD&A $1,050 - $1,080 $890 - $920 Africa 570 - 600 $500 - $550 $600 - $700 $600 - $700 Exploration Expense $400 - $430 $360 - $390 Advanced Projects & R&D $475 - $525 $430 - $480 Corporate/Other - - $60 - $70 $60 - $70 Tax Rate 28% - 32% 28% - 32% c,d e Total Gold 5,000 - 5,200 $625 - $675 $4,000 - $4,300 $3,000 - $3,300 Assumptions Boddington 70 - 80 $2.00 - $2.25 - - Gold Price ($/ounce) $1,500 $1,500 f Copper Price ($/pound) $3.50 $3.50 Batu Hijau 80 - 90 $1.80 - $2.20 - - Oil Price ($/barrel) $90 $90 Total Copper 150 - 170 $1.80 - $2.20 AUD Exchange Rate 1.00 1.00 a On a payable basis. b The future development of the Conga project remains subject to risk s and uncertainties as disclosed on the Company's cautionary statement. Development of the Conga project has been temporarily suspended as disclosed on November 30, 2011. Should the Company be unable to continue with the current development plan at Conga, Newmont may in the future reprioritize and reallocate capital to development alternatives in Nevada, Australia, Ghana, and Indonesia. c 2012 Attributable CAS Outlook is $640 - $690 per ounce. d 2012 Net Attributable CAS Outlook (by-product basis) is $600 - $650 per ounce. e Includes capitalized interest of approximately $140 million. f Assumes Batu Hijau economic interest of 44.5625% for 2012, subject to final divestiture obligations. Newmont Mining Corporation | Africa Mining INDABA 2012 | www.newmont.com 21 February 8, 2012
- 22. Endnotes Investors are encouragedto read the information contained in this presentation in conjunction with the following notes footnotes, the Cautionary Statement on slide 2 and the factors described under the “Risk Factors” section of the Company’s most recent Form 10- K, filed with the SEC on February 24, 2011. 1. When used in this presentation, the phrase “growth potential” represents the sum for all projects of the current estimated average annual production targets for the first five years of production for each such project anticipated to be commissioned between 2011 and 2017. Additionally, unless otherwise indicated, references to potential production used in this presentation mean that portion that is attributable to Newmont’s ownership or economic interest. 2. Estimated reserve “exploration upside potential” refers to mineralization that are additional to current Reserves and Non-Reserve Mineralization (“NRM”). Estimates of such mineralization are provided on an “order of magnitude” basis for informational purposes only. Conversion of such mineralization to Reserves is subject to substantive risks inherent in the mining industry, and no assurance can be given that such inventory will be converted to Reserves or of the timing or terms of any such conversion. Even if significant mineralization is discovered and converted to Reserves, it will likely take many years from the initial phases of exploration to development and to production, during which time the economic feasibility of production may change. As a result, there is greater uncertainty of the conversion of such inventory to production than in the case of Reserves or NRM. For additional information on Newmont’s Reserves and NRM, see our Year-End Reserve Report (as of 12/31/10) available at www.newmont.com/our-investors/reserves-and-resources. For a description of the key assumptions, parameters and methods used to estimate mineral reserves and mineralized material, as well as a general discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant factors, please see Newmont’s most recent Annual Report on Form 10-K, filed on February 24, 2011, and other SEC filings. 3. Newmont has established a gold price-linked dividend policy that serves as a non-binding guideline for Newmont’s Board of Directors (the “Board”). The Board reserves all powers related to the declaration and payment of dividends. In addition, the declaration and payment of future dividends remain at the discretion of the Board and will be determined based on Newmont’s financial results, cash and liquidity requirements, future prospects and other factors deemed relevant by the Board. In determining the dividend to be declared and paid on the common stock of the Company, the Board may revise or terminate such policy at any time without prior notice. 4. Newmont’s preliminary 2011 attributable gold production was 5,184Koz. Preliminary 2011 attributable copper production was 206 Mlbs. 5. The future development of the Conga project remains subject to risks and uncertainties as disclosed on page 2 – “Cautionary Statement.” Development of the Conga project has been temporarily suspended as disclosed on November 30, 2011. Should the Company be unable to continue with the current development plan at Conga, Newmont may in the future reprioritize and reallocate capital to development alternatives in Nevada, Australia, Ghana, and Indonesia. See Cautionary Note on page 2 and the Company’s related news release dated 11/30/11 and the Cautionary Statement on slide 2 of this presentation. 6. When used in this presentation, the phrase “forecasted potential production” represents the sum for all projects of the current estimated average annual production targets for 2017 for each such project anticipated to be commissioned by 2017. Additionally, unless otherwise indicated, references to potential production used in this presentation mean that portion that is attributable to Newmont's ownership or economic interest. Such estimates are subject to change based upon risks, future events and potential modifications to the business plan as indicated on slide 2. Newmont currently forecasts 2017 attributable gold and copper production of approximately 7Moz and 400 Mlbs, respectively. 7. 2011 outlook and 2011 actual capital expenditures are shown on a consolidated basis; 2012 outlook is shown on an attributable basis. 8. We caution you that, whether or not expressly stated, all measures of the Company's fourth quarter and 2011 financial results and condition contained in this news release, including production, average realized price, costs applicable to sales and capital expenditures, are preliminary and reflect our expected 2011 results as of the date of this news release. Actual reported fourth quarter and 2011 results are subject to management's final review as well as audit by the Company's independent registered . accounting firm and may vary significantly from those expectations because of a number of factors, including, without limitation, additional or revised information and changes in accounting standards or policies or in how those standards are applied. For a discussion of factors that may adversely affect our financial results and condition, see the Company’s 2010 Annual Report on Form 10-K, filed on February 24, 2011, with the SEC, as well as the Company’s other SEC filings, available on the SEC's website at www.sec.gov. The Company will provide additional discussion and analysis and other important information about its fourth quarter and 2011 financial results and condition when it reports actual results on February 24, 2012. 9. 2012 Outlook projections used in this presentation (“Outlook”) are considered “forward-looking statements” and represents management’s good faith estimates or expectations of future production results as of January 17, 2012 and is based upon certain assumptions. Such assumptions, include, but are not limited to those set forth on slides 3, 5 and 21, including gold price of $1,500/ounce, copper price of $3.50/pound, oil price of $90/barrel and Australian dollar exchange rate of 1.00. Consequently, Outlook cannot be guaranteed. Investors are cautioned that the Company does not undertake to subsequently reaffirm, provide comfort or otherwise update Outlook to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Investors should not assume that any lack of update constitutes a current reaffirmation of Outlook. 10. Dividend awarded subject to Board approval. 11. “NRM” used in this presentation refers to Measured, Indicated and/or Inferred materials that would be additional to Reserves. Newmont has determined that such NRM would be substantively the same as those prepared using the Guidelines established by the Society of Mining, Metallurgy and Exploration and defined as Resources. The conversion of NRM to Reserves is subject to substantive risks inherent in the mining industry, and no assurance can be given that NRM will be converted to Reserves or of the timing or terms of any such conversion. Even if significant mineralization is discovered and converted to reserves, it will likely take many years from the initial phases of exploration to development and to production, during which time the economic feasibility of production may change. As a result, there is greater uncertainty of the conversion of NRM to production than in the case of Reserves. 12. As of 12/31/2010. 13. Newmont has established a gold price-linked dividend policy that serves as a non-binding guideline for Newmont’s Board of Directors (the “Board”). The Board reserves all powers related to the declaration and payment of dividends. In addition, the declaration and payment of future dividends remain at the discretion of the Board and will be determined based on Newmont’s financial results, cash and liquidity requirements, future prospects and other factors deemed relevant by the Board. In determining the dividend to be declared and paid on the common stock of the Company, the Board may revise or terminate such policy at any time without prior notice. 14. Yield based on gold price of $1,700 and NEM closing price of $60. S&P 500 yield quartiles developed from yield range of 0-14%. Data provided by Capital IQ. 15. Yield based on gold price of $2,000 and NEM closing price of $60. S&P 500 yield quartiles developed from yield range of 0-14%. Data provided by Capital IQ. 16. Yield based on gold price of $2,500 and NEM closing price of $60. S&P 500 yield quartiles developed from yield range of 0-14%. Data provided by Capital IQ. 17. Data as of 1/27/2012 and sourced from Capital IQ. Peers consist of AUY, AU, AEM, ABX, GFI, GG, & KGC. 18. Data as of 1/27/2012 and sourced from Capital IQ. Peers consist of ABX, GG, AEM, KGC. NEM yield based on a $60/sh price. 19. Paid to shareholders as of 12/30/2011. 20. Calculated as dividend declared to be paid in Q4 2011 multiplied by shares outstanding on 9/30/2011. 21. Outlook as of January 17, 2012. See Cautionary statement on slide 2. 22. 2011 outlook and 2011 actual capital expenditures are shown on a consolidated basis; 2012 outlook is shown on an attributable basis. 23. Estimated average for the first full five years. 24. Production and per share numbers pulled from Capital IQ. Newmont Mining Corporation | Africa Mining INDABA 2012 | www.newmont.com 22 February 8, 2012
Editor's Notes
- #7 Not to be forgotten is the considerable optionality and upside embedded in our portfolio….Reserves sit on the right of the depiction that you see, and equate today to 93.5 Mozof gold and 9.4 Blbs of copper…Sitting in the Pre-scoping to Pre-Feasibility buckets (NRM), we believe that we have enough ounces to double reserves over time. In other words, we believe that there exists another Newmont behind today’s Newmont….I would urge you to start thinking about what we disclose as reserves and what that potential means - we might be twice as big as what we are today. We’re committed as a company to growing through the drill bit and we certainly see the potential to add growth from our internal opportunities.And quite frankly, that's where our focus is, moving some of those big undeveloped opportunities through into a reserve and ultimately into production….
- #8 We believe that we have an obligation to share the significant cash flow we are generating with the owners of the Company and that is what we intend to do with our gold price-linked dividend…Back on April 7 at our annual Investor Day, we were proud to announce that shareholders wouldreceive an annual dividend that increased by $0.20 for every $100 increase in our net realized gold price for the trailing quarter…. We enhanced our policy on Sept 19, 2011 to take advantage of the bullish metals prices that we see today. Between $1,700 and $1,999/oz gold, shareholders now receive and increase of $0.30/sh for every $100/oz movement in the gold price. At $2,000, that increase becomes $0.40/sh for each $100/sh increase in gold…clearly, no other company in the gold sector is committed to paying dividends like these…We strongly assert that no other company is as committed to returning capital to shareholders as NEM is. If you’re bullish and gold, are seeking leverage to the metal and desire some sort of additional income stream from your equity holdings, NEM is your company….
- #9 Results of dividend policy and growth story speak for themselves…Since April 7 we’ve outperformed the peers, and since the dividend policy enhancement, we’ve out performed the peers as well as the metals itself…Clearly, our combination of production growth and return of capital have resonated well with the street and market in general….Note: ~$490M paid in dividends on 2011 or 8% yield at $60 share price
- #10 DAVE SCHUMMERAfrica is the youngest and the highest growth region in our portfolioOpportunity to double production in the next 4 to 6 yearsWe are generating strong cash flow today (cost control and leverage to the gold price)Low cost producing regionAhafo easily within the industry cost curveAkyem coming on at competitive costsLongevity – our current operation and projects allow give us significant mine life +20 year mine life at Ahafo; 16 year mine life at AkyemOptionalityCurrent portfolio of internal projects allows us to double productionPlus our regional and genex opportunities allow for more upside in AfricaThere is more to come – regional exploration, Genex opportunities, Nimba and Ahafo NorthA portion of that success came from Africa where we added 1.1Moz to reserves at the Subika open pit. Subika is a great example of the opportunity we are seeing in Ghana. Deposits that have solid reserve bases and are always surprising us to the upside in terms of expansion potential. We continue to leverage our extensive land position to build our future through the drill bit and through the development of our internal portfolio of project, including Akyem, Subika and a number of other projects we will discuss with you over the next two days.Reference note: Paid ~$2.8B for Normandy in 2002
- #11 Gold mining in Ghana (historically called the Gold Coast) can be traced back to the 10th century along the region of Precambrian Birimian and Tarkwaian rocks structurally deformed and presently referred to as the Ashanti belt. The Obuasi mine is a world class gold operation developed under European control in the late-1800’s and actively produces gold from underground workings with owner AngloGold Ashanti Ltd. Historic production well-surpassed 25 million ounces and drill holes demonstrate gold occurrences extend as deep as 3 kilometers. Newmont established a presence on the Ashanti belt at the Akyem deposit following the acquisition of Normandy Mining of Australia in 2002. Akyem lies on the southeastern structural margin of the Ashanti belt and recently obtained license approval for mine and mill construction. However, the first producing Newmont Ghanaian gold mine lies westward of Ashanti in a recently defined Birimian structural corridor called the Sefwi belt. Economic deposits of gold occur along a 70 kilometer strike length of the Birimian System. Newmont began gold production in 2006 and by 2010 four pits provided mill ores while a decline was initiated in 2010 to evaluate underground potential. There is vast potential along these historic gold belts and Newmont is well positioned to leverage exploration opportunities along both belts. Now let’s discuss some of those opportunities.
- #12 Turning to Akyem…
- #13 Akyem received full funds approval back in March of this year and we expect the mine to be a significant contributor to our growth plan…Ghana for us is really the growth engine. We'll grow Ghana from roughly ~550Koz in 2011 to about 1Moz with Akyem, and then probably a couple hundred thousand ounces on top of that from underground. The future in Africa for us will be underground. We've seen some very exciting results deep and with the land acquisition cost in Ghana as high as it is, the future will be more underground than open pit for us…Akyemis a little different from the Ahafo operation in Ghana – Ahafo hasa number of pits. Akyemis one large open pit that will be mined for, depending on your metal price, 15 - 20 years. You can see what it does, adding ~400Koz to our portfolioa year at ~$500/oz. We plan to be inproduction in late 2013 or early 2014. …The project team has done an outstanding job getting the project progressed. Construction is on schedule and we remain on budget….Engineering is essentially done. You can see some of the mechanical work there off to the lower right….Note: ~$250M capex spent at Akyem in 2011Note: Construction to reach 50% complete near end of Q2 2012….
- #14 DALE FINN transition to Randy BarnesLooking for a parallel structure in the “Exploration Target” area. This is very early stage and not a slam dunk, but definitely worth taking a look.
- #15 Adriaan van Kersen transition to Dale Finn Stress – Resource expansion at Ahafo supports having a bigger mill and does not rob any mine life since we will be stockpiling lower grade ore as we process higher grade underground ore. Goal of the mill expansion: Increase ability to process and produce gold at Ahafo in light of significant resource discoveries that will be developed and brought into production. The mill has a positive impact on our production profile and we will still maintain our long mine life. Capital -We will have a capital estimate after we complete a scoping and pre-feasibility study. Since we are just starting this project, it is too early to discuss capital estimates. Timeline – start-up in 2015-2017
- #17 DALE FINN 20km north of where we are currently mining we have an 7km strike length with +7gpt ore shoots. With the encouraging underground results at Subika and Apensu at Ahafo South, at this point there is no reason to think we will not see similar ore bodies at Ahafo North.
- #18 Prior to closing, I’d just like to briefly touch on our per share metrics…we stand leagues apart from our peers in this regard…We are clearly the per share leader in the industry on reserves, production, adjusted earnings and consolidated cash flow, and we continue to deliver the highest level of exposure to the gold price in the industry…The charts displayed make evident how serious we are regarding share dilution.We are very cautious in terms of how and when we issue shares and we don’t plan to deviate from that approach…We are very cautious in terms of how and when we issue shares. The last share issuance we had was related to the Boddington acquisition from Anglo, so we will bulk up the balance sheet for existing production or near term production. We will generally not use shares to purchase assets that don't provide current production….Our commitment we will deliver the best per share metrics and as a result the highest leverage to gold. We believe this will translate into higher share price. I’d just close just by saying that shareholders should get real returns in their portfolio when gold prices go up.The thinking historically has been that delivering per share metrics in terms of production going to the bottom line and earnings and cash flow per share would yield additional price-related returns for shareholders. It will and it should….
- #21 RANDY BARNES transition to Kim HackneyAhafo ESR efforts have been a success and we are working to not only match, but exceed those efforts at Akyem. Forest:If our current permits to be in the reserve suffice for the life of the mineThe current permits do not have any restrictions for mining in that portion of the forest reserve that is in the Mining Lease other than all infrastructure except the pit must be located outside the forest reserve. It should be noted that the AjenjuaBepo Forest Reserve is a production forest reserve. This is a reserve that allows timber harvesting through permitting by the Forestry Commission. If the forest reserve constrains future exploration on the land packageThe current permits and mining lease do not have any restrictions for future exploration in that portion of the forest reserve that is in the Mining Lease (land package).