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newmont mining Boston_Roadshow_03_21_07 newmont mining Boston_Roadshow_03_21_07 Presentation Transcript

  • Reinvesting in the Gold Bull Market Boston Road Show March 21-22, 2007
  • Cautionary Statement 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, that are intended to be covered by the safe harbor created by such sections. Such forward-looking statements include, without limitation, (i) estimates of future gold and copper production and sales; (ii) estimates of future costs applicable to sales; (iii) estimates of future capital expenditures, royalty and dividend income, tax rates and expenses; (iv) estimates regarding timing of future development, construction, production or closure activities; (v) statements regarding future exploration results and the replacement of reserves; and (vi) statements regarding cost structure and competitive position. 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, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to, gold and other 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 in the countries in which we operate, and governmental regulation and judicial outcomes. For a more detailed discussion of such risks and other factors, see the Company’s 2006 Annual Report on Form 10-K, filed February 26, 2007 which is on file with the Securities and Exchange Commission, 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,” to reflect events or circumstances after the date of this news release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. Slide 2
  • Newmont - A World Leading Gold Company Only Major US Gold Company Founded in 1921 $19 Billion1 Market Capitalization Only Gold Stock in the S&P 500 and Fortune 500 Approximately $285 Million/Day1 Highly Liquid Gold Stock 29 Million Acres of Land in the World’s Best Gold Districts Gold Price Leverage “No Gold Hedge” Philosophy 1. Market Capitalization based on 03/16/2007 share price of $42.93, 451 million shares outstanding and 6.6 million average shares traded daily. Slide 3
  • Newmont’s Gold Assets Ghana Nevada Peru Indonesia • 5.9 Million Equity Gold Ounces Sold in 2006 from 11 Mine-sites Globally • Over 29 Million Acres of Land in the World’s Best Gold Districts Slide 4
  • Ongoing Leverage To Rising Gold Prices $599 ~ Average Realized Gold Price +36% YoY $900 2006 2006 $791 $791 $800 $700 146% U.S. Dollars ($/oz for Margin) $600 +146% $500 44% +44% 2005 $400 2006 $322 2005 2006 $322 260% $295 2006 $295 $300 +260% 2005 $223 2006 2005 $204 $223 $204 $200 2005 $62 2005 $100 $62 $- FY FY YTD Cash Operating Margin Q4 Net income ($M) YTD Net income ($M) Slide 5 ($/oz)
  • 2006 Financial & Operating Summary
  • 2006 Financial & Operating Summary Financial (millions except per share) Q4 2006 Q4 2005 YE 2006 YE 2005 Revenues $1,460 $1,292 $4,987 $4,352 Net cash provided from continuing operations $435 $489 $1,237 $1,243 Income from continuing operations $215 $69 $840 $360 Income from continuing operations per common share $0.48 $0.16 $1.87 $0.81 Net Income1 $223 $62 $791 $322 Net income per common share $0.50 $0.14 $1.76 $0.72 Operating Q4 2006 Q4 2005 YE 2006 YE 2005 Consolidated gold sales (000 ounces)2 2,011 2,407 7,361 8,429 Equity gold sales (000 ounces)2, 3 1,716 1,799 5,870 6,493 Average realized gold price ($/ounce) $619 $472 $599 $441 Costs applicable to sales ($/ounce) $322 $232 $304 $237 Cash operating margin $297 $240 $295 $204 1. For items impacting Net income, please refer to the Company’s fourth quarter press release, issued February 22, 2007. 2. Includes 17,400 and 100,300 ounces (consolidated and equity) for the quarter and year ended December 31, 2006, respectively, and 22,100 ounces sold (consolidated and equity) for the quarter and year ended December 31, 2005, from Phoenix and Leeville start-up activities which are not included in Revenue, Costs applicable to sales and Depreciation, depletion and amortization per ounce calculations prior to commencing operations on October 1, 2006 and October 14, 2006, respectively. Revenues and costs during start-up are included in Other income, net. Slide 7 3. Includes sales from the Holloway and Zarafshan discontinued operations.
  • Nevada Q4 Q4 YE YE NEVADA 2006 2005 2006 2005 Consolidated gold sales (000 ounces) 887 652 2,534 2,444 Equity gold sales (000 ounces) 887 606 2,427 2,287 Consolidated costs applicable to sales ($/ounce) $363 $352 $403 $333 Opportunities First full year of commercial production at Leeville and Phoenix mines Power plant construction and fleet reinvestment targeting cost savings Investment in housing and technical schools to address labor shortages Phoenix copper oxide potential Challenges Ongoing labor cost pressures Higher diesel and power prices Skilled and experienced labor Slide 8
  • Peru Q4 Q4 YE YE YANACOCHA 2006 2005 2006 2005 Consolidated gold sales (000 ounces) 439 1,063 2,572 3,328 Equity gold sales (000 ounces) 225 546 1,321 1,709 Consolidated costs applicable to sales ($/ounce) $244 $145 $193 $147 Opportunities Began construction of gold mill during 2006 Optimizing development plan for Conga Yanacocha sulfides provide future upside Challenges Decreasing ore grades Increasing stripping ratios Slide 9
  • Australia/New Zealand AUSTRALIA/NEW ZEALAND Q4 Q4 YE YE 2006 2005 2006 2005 Consolidated gold sales (000 ounces) 347 397 1,350 1,601 Equity gold sales (000 ounces) 347 397 1,350 1,601 Consolidated costs applicable to sales ($/ounce) $387 $315 $384 $317 Opportunities Boddington project under construction Boddington resource expansion drilling underway Boddington moly circuit potential Exploration upside at Callie underground and other regions Challenges Decreasing planned throughput and ore grades Decreasing production at Pajingo as it nears end of mine life Slide 10
  • Indonesia Q4 Q4 YE YE 2006 2005 2006 2005 Batu Hijau Consolidated copper sales (M lbs) 147 129 435 573 Equity copper sales (M lbs) 78 68 230 303 Consolidated costs applicable to sales ($/lb Cu) $0.64 $0.60 $0.71 $0.53 Consolidated gold sales (000 ozs) 169 181 435 721 Equity gold sales (000 ozs) 89 96 230 381 Consolidated costs applicable to sales ($/oz Au) $192 $162 $209 $152 Opportunities Stable production at a low-cost operation Higher planned grades and throughput in 2007 Remaining copper hedges expire during first quarter 2007 Challenges Higher stripping ratios/harder ores Higher fuel, energy and consumable prices Divestiture Slide 11
  • Ghana Q4 Q4 YE YE Ahafo 2006 2005 2006 2005 Consolidated gold sales (000 ozs) 125 - 202 - Equity gold sales (000 ozs) 125 - 202 - Consolidated costs applicable to sales ($/oz) $326 - $297 - Opportunities First full year of commercial production at the Ahafo mine Ahafo expansion opportunities Akyem project Challenges Limited mill availability and higher cost as a result of nation-wide power rationing Higher anticipated labor and contract service expenditures Slide 12
  • Projects Update Power Plant, Nevada Construction approximately 37% complete Total capital between $610 - $640 million Completion targeted for mid-2008 Gold Mill, Yanacocha in Peru Construction approximately 38% complete Total capital approximately $250 million Initial production expected in 2008 Boddington Mine, Australia Construction approximately 21% complete Total capital approximating $0.9 - $1.1 billion Initial production expected in late 2008 or early 2009 Akyem Mine, Ghana Deferred pending permitting, optimization and feasibility study Additional exploration drilling data underway Development decision expected by end of 2007 Slide 13
  • Changing Gold Industry Fundamentals
  • Gold Industry - Declining Production 8.0 2,700 Mine Production 7.6 NEM Equity Production (oz mm) Global Production (tonnes) 7.5 Pre-Merger NEM Equity Production (oz/mm) (5.5 mm ozs) 7.0 2,600 6.5 6.0 2,500 5.9 5.5 5.0 2,400 2001 2002 2003 2004 2005 2006 Source: GFMS Slide 15
  • 2007 Equity Gold Sales Guidance 2006 Actual to 2007 Guidance* Equity Gold Sales Variance 2006 Actual - Equity Gold Sales Other 6.5 Ghana 6% 3% Batu Hijau 4% Nevada 41% 0.02 Australia/New 0.23 Zealand 0.01 23% 0.06 0.57 6.0 5.88 Ounces (million) 0.11 Yanacocha 23% 2007 Guidance* - Equity Gold Sales 5.5 Ghana 5.38 8% Batu Hijau 5% Nevada Australia/New 47% Zealand 5.0 25% a d G a a a A a ch ic si ic an si 07 06 er r A ne co al Af 20 20 m al Ze do na A r nt In Ya ew th Ce or /N N ia al tr us Yanacocha A Slide 16 15% * 2007 number based on mid-point of guidance
  • Gold Industry - Costs $400 Total (%) 2006 change CAGR 2001 Industry* $ 176 $ 305 73% 12% $350 Newmont $ 182 $ 304 67% 11% $300 CAS ($/oz) $250 $200 $150 $100 2001 2002 2003 2004 2005 2006 GFMS (Industry Avg) Barrick Anglo Ashanti Newmont “Across the globe, producers have cited higher energy and fuel charges, increasing labor costs, shortages of experienced contractors, and higher operating consumables price.” GFMS Survey 2006 – Update 1 * Industry Cost based on H1 2006 GFMS Slide 17
  • 2007 Guidance: CAS Costs Applicable to Sales ($/oz) 2006 Actual = $304 2007 Guidance ~ 25% higher than 2006 Change by Region $600 % Increase by Cost Drivers 2007 Guidance CAS* 2006 CAS $500 Diesel & Others Electricity 3% 5% $400 Consumbles 5% $300 Labor & Contract $200 Services 15% $100 Production 72% $0 Ahafo Australia/New Nevada Yanacocha Batu Hijau Zealand Slide 18 * 2007 number based on mid-point of guidance
  • Gold Industry – Cost Escalation Trends Industry Average Process Plant Construction Costs (Source: Global Insights) 1.80 1.70 1.60 Index (2002 = 1.00) 1.50 1.40 1.30 1.20 1.10 1.00 0.90 2002 2003 2004 2005 2006 Equipment Steel Labor Total Slide 19
  • Stage Gating Process Expensed Projects Capitalized Projects Slide 20
  • Exploration & Merchant Banking
  • Gold Reserves – Fifth Consecutive Year Of Growth 2005 to 2006 Proven and Probable Equity Gold Reserves 95 2006 Reserve Sensitivity 93.9 7.9 93.2 7.4 Approximately 3% for O u n c e s ( m illio n s ) every $25/oz change in 90 gold price between $450- $550/oz. 1.5 85 2.0 3.7 80 Actual 2005 Depletion Acquisitions Zarafshan Revisions Additions Actual 2006 Slide 22
  • Newmont’s Reserve Growth Track Record & Discovery Cycles 100 Ghana 29 Million Acres in World Class Gold Districts Australia 80 South America 60 Central Asia & Indonesia North 40 America 20 0 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 Slide 23
  • 2007 Exploration Budget Budget by Location Budget by Program Diamonds 9% Opportunity Fund North America Opportunity & Support 21% 24% Fund 9% Tech Support/ Management 9% Near Mine West Africa 10% 54% China/SE Asia 2% Australia 14% Turkey 2% Greenfields 20% South America 28% Near-Mine Programs: Carlin Trend in Nevada, Mexico, Yanacocha in Peru, Sefwi Belt in Ghana, and Tanami in Australia Greenfield Projects: Guiana Shield in South America, Andes in Peru, and Greenstone Belts in West Africa Slide 24
  • 2006 Merchant Banking Results Royalty and Dividend Income Royalty and Other Income: Record $120 million (+52% over 2005) Equity Portfolio and Investment Growth Market value of marketable securities portfolio: $1.4 billion Alberta Heavy Oil Investment: $20 million investment $280 million sale proceeds Canadian Oil Sands Trust: $268 million investment $800 million market value Value Creation Investments $152 million investment in Shore Gold Inc.’s FALC – Diamond Project Other Assets - Iron Ore and Coal, Arctic Gas, Gold Refineries Slide 25
  • Value Creation Investments Gold Refineries 50% European Refineries, 40% Australian Refineries Combined, refine and distribute >20% of world’s gold Iron Ore 43.5% Euronimba Project, Guinea, West Africa Partnered with BHP in world class project Coal 100% Millmerran Deposit, Queensland, Australia Thermal coal resource has high potential in current market Gas 9% Hecla & Drake fields, Melville Island, Canada Potential LNG application for largest gas field in N.A. Slide 26
  • Committed Technical Expertise Technical Services 80 person Research and Development Team Proprietary Metallurgy labs, Mining Software, and Patents Highest R&D and Technical Focus of Any Gold Producer Projects Group Expertise and Capacity Across Full Range of Projects Institutionalized Stage Gate Process Exploration Group 325 Full-Time geoscientists Proprietary Geochemical and Geophysical Capacity Proprietary Global Geological Information System Proprietary Portfolio and Targeting System Slide 27
  • Gold Price Leverage & Conclusions Expanding Margins $800 $700 Increasing Earnings $599 $600 Gold Price Leverage $500 $441 $412 $295 $366 $400 $313 $205 $271 $196 $300 $170 $126 $93 $200 $304 $236 $216 $100 $196 $187 $178 $- 2001 2002 2003 2004 2005 2006 CAS/Oz Operating Margin/Oz Realized Price/Oz Slide 28
  • The Gold Company Of Choice For A Gold Bull Market Fifth Consecutive Year of Reserve Growth Growing Operating Margins (+44% in 2006) Building New Lower-cost Mines Balanced Global Portfolio Strong, Liquid Balance Sheet Institutional Quality Investment “No Gold Hedging” Philosophy Slide 29