Prepared by R.R. Donnelley Financial -- Amendment #1 to Form 10-Q dated March 31, 2002

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

AMENDMENT NO.1
to

FORM 10-Q/A

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
FOR THE QUARTERLY PERIOD ENDED March 31, 2002
   
or
   
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                        

Commission File Number: 001-31240

NEWMONT MINING CORPORATION
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction
incorporation or organization)
  84-1611629
(I.R.S. Employer Identification No.)
     
1700 Lincoln Street, Denver, Colorado
(Address of principal executive offices)
  80203
(Zip Code)

303-863-7414
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. xYesoNo

There were 340,161,190 shares of common stock outstanding on May 6, 2002 (and 55,182,449 exchangeable shares).




PART I—FINANCIAL INFORMATION

ITEM 1. Financial Statements

NEWMONT MINING CORPORATION
STATEMENTS OF CONSOLIDATED OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

  Three Months Ended
  March 31,
 
               
  2002     2001  
 
   
 
     Unaudited  
    (in thousands, except per share)  
Sales and other income   As Revised        
    Sales – gold $ 482,234     $ 424,097  
    Sales – base metals   11,514        
    Royalties   3,192        
    Dividends, interest, foreign currency exchange and other income (loss)   1,023       3,428  
 
   
 
    497,963       427,525  
 
   
 
               
Costs and expenses              
    Costs of sales   333,146       267,860  
    Depreciation, depletion and amortization   103,001       75,176  
    Exploration and research   11,567       15,315  
    General and administrative   21,315       15,911  
    Interest, net of capitalized interest of $1,222 and $2,847, respectively   28,224       20,272  
    Merger and restructuring         60,510  
    Other   870       3,543  
 
   
 
    498,123       458,587  
 
   
 
               
Operating loss   (160 )     (31,062 )
Gain on derivative instruments   6,331       15,573  
 
   
 
               
Pre-tax income (loss) before minority interest and equity loss   6,171       (15,489 )
Income tax expense   (4,816 )     (2,546 )
Minority interest in income of affiliates   (10,643 )     (14,816 )
Equity income (loss) of affiliates   516       (4,395 )
 
   
 
               
Net loss $ (8,772 )   $ (37,246 )
Preferred stock dividend   (1,869 )     (1,869 )
 
   
 
               
Net loss applicable to common shares $ (10,641 )   $ (39,115 )
 
   
 
               
Net loss $ (8,772 )   $ (37,246 )
Other comprehensive income (loss), net of tax   31,487       (4,657 )
 
   
 
               
Comprehensive income (loss) $ 22,715     $ (41,903 )
 
   
 
               
Net loss per common share, basic and diluted $ (0.04 )   $ (0.20 )
 
   
 
               
Basic and diluted weighted average shares outstanding   281,467       192,607  
Cash dividends declared per common share $ 0.03     $ 0.03  
 
   
 

See Notes to Consolidated Financial Statements


NEWMONT MINING CORPORATION
CONSOLIDATED BALANCE SHEETS
Unaudited

                 
    March 31,     December 31,  
    2002     2001  
   
   
 
                 
    (in thousands)
Assets     As Revised        
   Cash and cash equivalents   $ 511,558     $  149,431  
   Short-term investments     17,910       8,185  
   Accounts receivable     51,485       19,088  
   Inventories     513,806       384,202  
   Marketable securities of Lihir     84,002       66,918  
   Prepaid taxes     13,345       29,229  
   Derivative instruments     20,851        
   Current portion of deferred income tax assets     29,747       9,627  
   Other current assets     135,526       42,780  
   
   
 
                 
      Current assets     1,378,230       709,460  
   Property, plant and mine development, net     4,335,681       2,207,048  
   Investments     1,008,823       559,809  
   Long-term inventory     91,924       92,689  
   Derivative instruments     50,813       2,621  
   Goodwill     2,506,935        
   Intangible assets     45,997        
   Deferred income tax assets     481,423       398,391  
   Other long-term assets     134,191       92,387  
   
   
 
      Total assets   $ 10,034,017     $  4,062,405  
   
   
 
Liabilities                
   Current portion of long-term debt   $ 440,077     $  192,151  
   Accounts payable     85,255       80,884  
   Current portion of deferred income tax liabilities     25,895       7,914  
   Derivative instruments     124,286       1,331  
   Other accrued liabilities     317,434       203,531  
   
   
 
      Current liabilities     992,947       485,811  
   Long-term debt     1,736,718       1,089,718  
   Reclamation and remediation liabilities     259,070       176,934  
   Deferred revenue from sale of future production     191,039       191,039  
   Derivative instruments     377,885       8,260  
   Deferred income tax liabilities     572,262       133,621  
   Employee related benefits     148,373       156,834  
   Other long-term liabilities     214,974       88,661  
   
   
 
      Total liabilities     4,493,268       2,330,878  
   
   
 
Contingencies (Notes 5, 7 and 14)                
Minority interest in affiliates     298,336       251,479  
   
   
 
Stockholders’ equity                
   Convertible preferred stock     11,500       11,500  
   Common stock     537,139       313,881  
   Additional paid-in capital     4,976,629       1,458,369  
   Accumulated other comprehensive income (loss)     19,633       (11,854 )
   Retained deficit     (302,488 )     (291,848 )
   
   
 
     Total stockholders’ equity     5,242,413       1,480,048  
   
   
 
     Total liabilities and stockholders’ equity   $ 10,034,017     $  4,062,405  
   
   
 

See Notes to Consolidated Financial Statements


NEWMONT MINING CORPORATION
STATEMENTS OF CONSOLIDATED CASH FLOW

  Three Months Ended
  March 31,
 
               
    2002       2001  
 
   
 
     Unaudited  
    (in thousands)  
Operating activities:   As Revised          
   Net loss $ (8,772 )   $ (37,246 )
   Adjustments to reconcile net loss to net cash provided by operating activities:              
   Depreciation, depletion and amortization   103,001       75,176  
   Amortization of capitalized mining costs   7,498       9,612  
   Deferred tax benefit   (666 )     (19,790 )
   Gain on derivative instruments   (6,331 )     (15,573 )
   Noncash merger and restructuring expenses   —         21,589  
   Foreign currency exchange loss   3,621       1,017  
   Minority interest, net of dividends   10,643       9,618  
   Undistributed (gains) losses of affiliated subsidiaries   (516 )     4,395  
   Gain on sale of assets and other   (4,452 )     (674 )
   (Increase) decrease in operating assets:              
      Accounts receivable   18,920       4,216  
      Inventories   5,305       29,735  
      Other assets   16,642       8,215  
   Increase (decrease) in operating liabilities:              
      Accounts payable and other accrued liabilities   (43,642 )     (66,314 )
      Other liabilities   (28,648 )     (5,369 )
 
   
 
   Net cash provided by operating activities   72,603       18,607  
 
   
 
Investing activities:              
   Additions to property, plant and mine development   (53,278 )     (99,813 )
   Repayments (advances to) from joint ventures and affiliates   (24,750 )     8,794  
   Proceeds from sale of short-term investments   406,731       —    
   Net cash effect of acquisitions   (18,313 )     —    
   Proceeds from asset sales and other   269       188  
 
   
 
Net cash provided by (used in) investing activities   310,659       (90,831 )
 
   
 
Financing activities:              
   Repayment of short-term debt   —         (10,000 )
   Proceeds from long-term debt   450,431       462,000  
   Repayment of long-term debt   (475,244 )     (448,560 )
   Dividends paid on common and preferred stock   (13,792 )     (7,730 )
   Decrease in restricted cash   —         40,000  
   Proceeds from stock issuance and other   15,739       (324 )
 
   
 
Net cash (used in) provided by financing activities   (22,866 )     35,386  
 
   
 
Effect of exchange rate changes on cash   1,731       6,459  
 
   
 
Net change in cash and cash equivalents   362,127       (30,379 )
Cash and cash equivalents at beginning of period   149,431       77,558  
 
   
 
Cash and cash equivalents at end of period $ 511,558     $ 47,179  
 
   
 
Supplemental information:              
   Interest paid, net of amounts capitalized of $1,222 and $2,847, respectively $ 31,916     $ 28,175  
   Income taxes paid $ 13,974     $ 18,424  

See Notes to Consolidated Financial Statements




NEWMONT MINING CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)

(1) Basis of Preparation and Revision of Financial Statements

          These unaudited interim consolidated financial statements of Newmont Mining Corporation and its subsidiaries (collectively, “Newmont”) have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Such rules and regulations allow the omission of certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles as long as the statements are not misleading. In the opinion of management, all adjustments necessary for a fair presentation of these interim statements have been included. These adjustments are of a normal recurring nature, except for the effects of the February 2002 acquisitions as described below. These interim financial statements should be read in conjunction with the consolidated financial statements of Newmont included in its 2001 Annual Re port on Form 10-K and information on Form 8-K dated February 15, 2002, including Amendment No.1, filed on April 16, 2002.

          Certain prior year amounts have been reclassified to conform to the current year presentation. References to “A$” refers to Australian currency, and “$” or “US$”, to United States currency.

          On February 13, 2002, Newmont stockholders approved adoption of an Agreement and Plan of Merger that provided for a restructuring of Newmont to facilitate the February 2002 acquisitions described below and to create a flexible corporate structure. Newmont merged with an indirect, wholly-owned subsidiary that resulted in Newmont (or old Newmont) becoming a direct wholly-owned subsidiary of a newly formed holding company. The new holding company, previously a direct, wholly-owned subsidiary of old Newmont, was renamed Newmont Mining Corporation. There was no impact to the Consolidated Financial Statements of Newmont as a result of this restructuring and former stockholders of old Newmont became stockholders of the new holding company.

          Subsequent to the filing of the first quarter Form 10-Q, the Company determined that certain adjustments were required to the financial statements for the three-month period ended March 31, 2002. Overall, the adjustments reduced the first quarter net loss by $0.2 million, or $0.0 per share. These adjustments primarily were necessitated to properly present the conversion to US GAAP and translation to US dollars of certain financial statement balances of the recently acquired Newmont Australia Limited (formerly Normandy Mining Limited). In addition, certain other adjustments were required to properly record first quarter income related to insurance settlements, insurance expense of the Company’s equity investee, and income related to a property sale. Accordingly, the Company has revised its first quarter financial statements, primarily resulting in a decrease in the first quarter operating loss from $13.2 million to $0.2 million, a decrease in the gain on derivative instruments from $19.0 million to $6.3 million, a decrease in minority income from affiliates from $12.5 million to $10.6 million, and an increase in equity income of affiliates to $0.5 million from a loss of $1.2 million. See Note 18 for the principle effects of the revision.


(2) Acquisitions of Normandy and Franco-Nevada

          In November 2001, Newmont announced proposed acquisitions of Normandy Mining Limited (“Normandy”), an Australian company, and Franco-Nevada Mining Corporation Limited (“Franco-Nevada”), a Canadian company. On February 16, 2002, Newmont completed the acquisition of Franco-Nevada pursuant to a Plan of Arrangement. On February 20, 2002, Newmont gained control of Normandy through an off-market bid for all of the ordinary shares in the capital of Normandy. For accounting purposes, the effective date of the Normandy acquisition was the close of business on February 15, 2002, when Newmont received binding tenders for more than 50% of the shares of Normandy. Accordingly, the results of operations of Normandy and Franco-Nevada have been included in the accompanying financial statements from February 16, 2002 forward. On February 26, 2002, when the off-market bid for Normandy expired, N ewmont had a relevant interest in more than 96% of Normandy’s outstanding shares. NMC exercised their compulsory acquisition rights under Australian law to acquire the remaining shares of Normandy in April 2002.

          Consideration paid for Normandy included 3.85 shares of Newmont common stock for every 100 ordinary shares of Normandy (including ordinary shares represented by American depositary receipts) plus A$0.50 per Normandy share, or the U.S. dollar equivalent of that amount for Normandy stockholders outside Australia. Pursuant to a Canadian Plan of Arrangement, Newmont acquired Franco-Nevada in a stock-for-stock transaction in which Franco-Nevada common stockholders received 0.8 of a share of Newmont common stock or 0.8 of a Canadian exchangeable share (exchangeable for Newmont common), for each common share of Franco-Nevada. The exchangeable shares are substantially equivalent to Newmont common shares. The purchase price for these acquisitions totaled $4.3 billion, comprised of 197.4 million Newmont shares (or share equivalents), $462.1 million in cash and approximately $90 million of direct costs. The value of Newmont shares (or share equivalents) was


$19.01 per share based on the average market price of the shares over the two-day period before and after January 2, 2002, the last trading day before the final and revised terms for the acquisitions were announced.

       The combination of Newmont, Normandy and Franco-Nevada was executed to create a platform for rational growth and for delivering consistent, superior returns to shareholders. With a larger global operating base, a broad and balanced portfolio of development projects and a stable income stream from mineral royalties and investments, the combined company will have opportunities to continually optimize returns. Newmont also expects to realize synergies through rationalization of corporate overhead and exploration programs, realization of operating efficiencies, and reductions in operating and procurement costs, interest expense and income taxes.

       The acquisitions were accounted for using the purchase method of accounting whereby assets acquired and liabilities assumed were recorded at their fair market values as of the date of acquisition. The excess of the purchase price over such fair value was recorded as goodwill. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” goodwill was assigned to specific reporting units and will be reviewed for possible impairment at least annually or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value. The following reflects the preliminary purchase allocation for the acquisition of 100% of Normandy (in millions, except per share data):

Shares of NMC common stock issued to Normandy stockholders, including shares attributable to Franco-Nevada’s 19.8%
   investment in Normandy
    86.8  
Value of NMC stock per share   $ 19.01  
   

Fair value of NMC common stock issued   $ 1,649.9  
Plus-Cash consideration of A$0.50 per share     462.1  
Plus-Fair value of Normandy stock options cancelled by Newmont     6.0  
Plus-Estimated direct acquisition costs incurred by Newmont     60.0  
   

        Total Purchase Price     2,178.0  
Plus-Fair value of liabilities assumed by Newmont:        
    Current liabilities, excluding accrued acquisition costs and settlement of stock options     195.7  
    Long-term debt, including current portion     935.7  
    Derivative instrument liabilities     414.5  
    Other long-term liabilities     453.1  
    Minority interests acquired     37.2  
Less-Fair value of assets acquired by Newmont:        
    Current assets     (460.6 )
    Property, plant and equipment, including mineral reserves     (1,171.9 )
    Purchased undeveloped mineral interests     (640.9 )
    Exploration properties     (33.1 )
    Equity investments in mining operations     (216.5 )
    Other long-term assets     (273.1 )
    Intangible assets     (12.7 )
   

         
Residual purchase price allocated to goodwill   $ 1,405.4  
   


       The following table reflects the preliminary purchase allocation for the acquisition of Franco-Nevada (in millions, except per share data):

Shares of NMC common stock (or equivalents) issued to Franco-Nevada stockholders, excluding shares attributable to
    Franco-Nevada’s 19.8% investment in Normandy
  110.6  
Value of NMC stock per share $  19.01  
 

 
Fair value of NMC common stock issued $  2,101.2  
Plus-Fair value of Franco-Nevada options assumed by Newmont   30.4  
Plus-Fair value of Franco-Nevada warrants assumed by Newmont   13.3  
Plus-Estimated direct acquisition costs incurred by Newmont   30.0  
 

 
Total purchase price   2,174.9  
Plus-Fair value of liabilities assumed by Newmont:      
    Current liabilities, excluding accrual of acquisition costs   8.5  
    Other liabilities   209.9  
Less-Fair value of assets acquired by Newmont:      
Current assets   (708.0 )
    Fair value of mining royalty properties   (404.2 )
    Fair value of investments in affiliated companies (excluding the 19.8% interest in Nrmandy)   (108.0 )
 

 
       
    Residual purchase price allocated to goodwill $  1,173.1  
 

 

       The purchase price allocations for Normandy and Franco-Nevada are preliminary and will be finalized following the completion of an independent appraisal expected to be available by the end of the quarter ended June 30, 2002. The final purchase price allocations may differ from the preliminary allocation presented above.

       For information purposes only, the following unaudited pro forma data reflect the consolidated results of operations of Newmont as if the acquisitions of Normandy and Franco-Nevada had taken place on January 1, 2001 (in millions, except per share data):

  Three months ended
 
  March 31,   March 31,
  2002   2001
 
 
  As Revised          
Sales and other income $ 651.3 $ 737.4
Net loss applicable to common shares $ (139.1 )   $ (80.9 )
Basic and diluted loss per common share $ (0.35 )   $ (0.21 )
Basic and diluted weighted average common shares outstanding   393.9       390.0  

       On a pro forma basis during the quarters ended March 31, 2002 and 2001, the net loss reflects mark-to-market losses on derivative instruments totaling $161.3 million and $111.2 million, respectively, net of tax. The above pro forma amounts do not include the application of hedge accounting to significant portions of acquired derivative instruments. The net loss for the quarter ended March 31, 2001 includes $43.7 million of non-recurring expenses, net of tax, associated with Newmont’s merger with Battle Mountain Gold Company (“Battle Mountain”). The pro forma information is not indicative of the results of operations that would have occurred had the acquisitions been consummated on January 1, 2001. The information is not indicative of the combined company’s future results of operations.

       As part of the purchase of Normandy and Franco-Nevada during the quarter ended March 31, 2002, Newmont acquired identifiable intangible assets, other than goodwill, of $46.0 million, primarily for exploration properties. These intangible assets are not subject to amortization and will be tested for impairment at least annually.


       The allocation of goodwill to reporting units is preliminary and is expected to be finalized by the end of the second quarter; therefore, the final allocation could differ from the preliminary amount. Changes in the carrying amount of goodwill by reporting unit during the quarters ended March 31, 2002 are summarized in the following table (in millions):

                          Other          
  North   South         Base   Mining   Merchant      
  America   America   Australia   Metals   Operations   Banking   Total
 
 
 
 
 
 
 
 
                                         
Balance at January 1, 2002 $   $   $   $   $   $   $
                                         
Preliminary purchase price allocation   252.6         676.3     159.0     288.7     1,130.3     2,506.9
Impairment losses                          
Gain (loss) on disposal of separate reporting units                          
                                         
Balance at March 31, 2002 $ 252.6   $   $ 676.3   $ 159.0   $ 288.7   $ 1,130.3   $ 2,506.9

       Following the February 2002 acquisitions, Normandy was renamed Newmont Australia Ltd. and Franco-Nevada was renamed Newmont Mining Corporation of Canada Limited. Old Newmont was renamed Newmont USA Limited.

(3) Merger with Battle Mountain Gold Company

       On January 10, 2001, Newmont completed a merger with Battle Mountain where each share of common stock of Battle Mountain and each exchangeable share of Battle Mountain Canada Ltd. (a wholly-owned subsidiary of Battle Mountain) was converted into the right to receive 0.105 share of Newmont common stock, or approximately 24.1 million shares. Newmont also exchanged 2.3 million shares of newly issued $3.25 convertible preferred stock for all outstanding shares of Battle Mountain’s $3.25 convertible preferred stock. The merger was accounted for as a pooling of interests, and as such, the consolidated financial statements include Battle Mountain’s financial data as if Battle Mountain had always been part of Newmont.

(4) Inventories

  At March 31,   At December 31,
  2002   2001
 
 
  (in thousands)
Current: As Revised      
    Ore and in-process inventories $ 338,254   $ 280,419
    Precious metals   60,425     10,302
    Materials and supplies   115,127     92,556
    Other       925
 
 
           
  $ 513,806   $ 384,202
 
 
           
Non-current:          
    Ore in stockpiles $ 91,924   $ 92,689
 
 


(5) Investments

  At March 31,   At December 31,
  2002   2001
 
 
  (in thousands)
Investments in affiliates: As Revised      
    Batu Hijau $ 585,024   $ 559,809
    TVX Newmont Americas   167,600    
    Australian Magnesium Corporation   34,700    
    Australian Gold Refinery   10,300    
 
 
    797,624     559,809
 
 
           
Other:          
    Echo Bay Mines   108,000    
    Infrastructure Bond   103,199    
 
 
           
    211,199    
 
 
  $ 1,008,823   $ 559,809
 
 

Investments in Affiliated Companies

    Batu Hijau

       Newmont has an indirect 45% interest in P.T. Newmont Nusa Tenggara (PTNNT), the owner of the Batu Hijau copper/gold mine in Indonesia, through the Nusa Tenggara Partnership (NTP). The equity investment in Batu Hijau was $585.0 million and $559.8 million at March 31, 2002 and December 31, 2001, respectively, based on accounting principles generally accepted in the U.S. Differences between 56.25% of NTP’s net assets and Newmont’s investment include (i) $202.6 million for the fair market value adjustment recorded by NTP in conjunction with Newmont’s initial contribution, (ii) $25.5 million for intercompany charges, (iii) $113.0 million for the fair market value adjustment recorded by Newmont in conjunction with the purchase of a subsidiary minority interest and (iv) $139.8 million for contributions recorded by Newmont that were classified as debt by NTP. Certain of these amounts are amortized or deprec iated on a unit-of-production basis. (See Note 13 for a description of Newmont’s equity loss in Batu Hijau, where the net loss reflects the elimination of interest between PTNNT and NTP.) NTP’s long-term debt was guaranteed by Newmont and our partner until project completion tests were met in October 2000, at which time such debt became non-recourse to Newmont. Repayment of this debt is in semi-annual installments of $43.5 million through November 2010, and $22.1 million from May 2011 through November 2013.

       On May 9, 2002, PTNNT completed a restructuring of its $1.0 billion project financing facility (Senior Debt) that provides PTNNT the capability to defer up to a total of $173.4 million in principal payments scheduled for 2002 and 2003. Any deferred principal amounts will be amortized between 2004 and 2010. Under this restructuring, PTNNT is not permitted to pay dividends or make other restricted payments to NTP’s partners as long as any amount of deferred principal is outstanding; however, there is no restriction on prepaying any of the deferred principal amounts. Amounts currently outstanding under the project financing facility total $913.4 million.

       Newmont and our partner provide a contingent support line of credit to PTNNT. During 2002, Newmont funded $24.8 million under this facility as its pro-rata share for capital expenditures. Additional support from NTP’s partners available under this facility is $115.0 million, of which Newmont’s pro-rata share is $64.7 million.


       Following is NTP summarized financial information based on U.S. generally accepted accounting principles:

  Three months ended
  March 31,
 
               
  2002   2001
 
 
               
  (in thousands)
Revenues $ 93,197     $ 92,047  
Net loss $ (9,012 )   $ (20,401 )
               
  At March 31,   At December 31,
  2002   2001
 
 
               
  (in thousands)
    As Revised          
Current assets $ 200,212     $ 164,723  
Property, plant and mine development, net $ 1,903,241     $ 1,921,568  
Other assets $ 268,772     $ 241,173  
Debt and related interest to partners and affiliate $ 256,123     $ 254,891  
Other current liabilities $ 202,873     $ 201,884  
Long-term debt-third parties (including current portion) $ 935,771     $ 935,771  
Other liabilities $ 7,264     $ 5,758  

TVX Newmont Americas

       Newmont has a 49.9% interest in TVX Newmont Americas with an equity investment of $171.6 million at March 31, 2002. The principal assets of TVX Newmont Americas are interests in the following operating gold mines in South America and Canada:

Mine
  Interest of TVX Newmont Americas
  Location

 
 
Paracatu   49%   Brazil
Crixas   50%   Brazil
La Coipa   50%   Chile
Musselwhite   31.9%   Canada
New Britannia   50%   Canada

Other Investments

    Australian Magnesium Corporation

       Newmont has a 22.8% voting interest in Australian Magnesium Corporation (“AMC”). Newmont has an obligation to contribute to AMC approximately $53.3 million in equity between October 31, 2002 and January 31, 2003. Newmont is guarantor of AMC’s foreign exchange hedging position of approximately $124 million, as well as AMC’s A$72 million (approximately $38 million) corporate facility. Newmont provided a $50 million contingency equity commitment in the event the project does not achieve certain specified production and operating criteria by September 2006.

       A series of foreign exchange contracts have been entered into by QMC Finance Pty. Limited (“QMC”), a subsidiary of Australian Magnesium Corporation. Under a facility agreement between QMC and ANZ Banking Group Limited, all obligations related to these contracts have been guaranteed by Newmont Australia and certain of its wholly-owned subsidiaries. These transactions are designed to convert the receipt of Euro dollars and US$ revenue from the sale of magnesium into A$ cash flows to cover A$ operating costs and the servicing of A$-denominated debt. The contracts include foreign exchange forward contracts and bought put options. ANZ Banking Group Limited is the counter party to all the contracts. As of March 31, 2002, the fair value of the transactions was approximately US$(6.4) million.

    Echo Bay Mines Ltd.

       Newmont obtained a 48.8 % interest in Echo Bay through its acquisition of Franco-Nevada. This interest resulted from the conversion of Echo Bay capital securities to equity in conjunction with a reorganization that was completed on April 3, 2002. The investment in Echo Bay was $108.0 million at March 31, 2002.


Infrastructure Bond

       During 1996, Normandy entered into a series of contemporaneous transactions whereby infrastructure bonds were issued and sold, resulting in the realization of a premium. This premium is amortized over the life of the bonds and the unamortized balance of the premium at March 31, 2002 was $103.2 million.

(6) Long-Term Debt

       With the acquisition of Normandy, NMC increased its debt as detailed in the following schedule:

  March 31,   December 31,
    2002     2001  
 
 
 
 
(in thousands)
Sale-leaseback of refractory ore treatment plant $ 309,718   $  318,092  
Newmont $600 million revolving credit facility        
8.375% debentures, net   199,146     200,583  
8.625% notes, due April 1, 2002   150,000     150,000  
8.625% notes, net   271,268     272,386  
6% convertible subordinated debentures   99,980     99,980  
Newmont Australia A$490 million revolving credit facility   170,570      
Newmont Australia 7.625% notes, net   153,084      
Newmont Australia 7.5% notes, net   102,222      
Newmont Yandal 8.875% notes, net   299,772      
Medium-term notes   32,000     32,000  
Newmont Australia infrastructure bonds   94,728      
Interest rate swaps   1,899     588  
Project financings   292,408     208,240  
 
 
 
             
    2,176,795     1,281,869  
Current maturities   (440,077 )   (192,151 )
 
 
 
             
  $ 1,736,718   $  1,089,718  
 
 
 
             

       Scheduled minimum long-term debt repayments are $410 million for the remainder of 2002, $100 million in 2003, $178 million in 2004, $448 million in 2005, $47 million in 2006 and $994 million thereafter.

       Newmont Australia has an A$490 million committed revolving multi-option facility with a syndicate of banks. In May 2002, Newmont expects to repay the $170.6 million outstanding under this facility, closing it out, and to increase the Newmont $600 million facility to $750 million, with the addition of a $150 million Australian bank tranche. In 1998, Newmont Australia issued guaranteed $100 million seven year notes at 7.5% interest and $150 million ten year notes at 7.625% interest. Interest is paid semi-annually. At March 31, 2002, Newmont Australia had $90 million outstanding for project financing.

(7) Sales Contracts, Commodity and Derivative Instruments

       Newmont has a “no hedging” philosophy and generally sells production at spot market prices. Nevertheless, Newmont has, on a limited basis, entered into derivative contracts to protect the selling price for certain anticipated gold production and to manage risks associated with sales contracts, commodity and interest rates and foreign currency. Also, in conjunction with the Normandy transaction, Newmont acquired a substantial derivative instrument position. Newmont is not required to place collateral with respect to commodity instruments and there are no margin calls associated with such contracts. Credit risk is minimized by dealing only with major financial institutions/counterparties.

Price-Capped Sales Contracts

       In mid-1999, Newmont purchased near-term put option contracts for 2.85 million ounces of gold, with a strike price of $270 per ounce. These contracts expired between August 1999 and December 2000. This purchase was paid for by selling call option contracts for 2.35 million ounces at average strike prices ranging from $350 to $386 per ounce. The initial fair value of the put options of $37.6 million was amortized over the term of the options. The call option contracts, with an initial fair value of $37.6 million, were marked to market at each reporting date. A non-cash gain of $15.6 million was recorded for the three months ended March 31, 2001.

       In September 2001, Newmont entered into transactions that closed out these call options. The options were replaced with a series of sales contracts requiring physical delivery of the same quantity of gold over slightly extended future periods. Under the terms of the contracts, Newmont will realize the lower of the spot price on the


delivery date or the capped price ranging from $350 per ounce in 2005 to $392 per ounce in 2011. The value of the sales contracts was recorded as deferred revenue and will be included in sales revenue as delivery occurs.
As of March 31, 2002, the following price-capped sales contracts were outstanding:

    Ounces
  Price-Cap
 
2005   500,000   $350  
2008   1,000,000   $384  
2009   600,000   $381  
2011   250,000   $392  

Prepaid Forward Sales Contracts

       In 1999, Newmont entered into a prepaid forward sale contract for approximately 483,333 ounces of gold, with initial proceeds of $137.2 million, for delivery in June 2005, 2006 and 2007. Such proceeds were recorded as deferred revenue and will be recognized in income when the related gold is delivered. Additional proceeds will be determined at each delivery date based on the excess of the then existing market price (not to exceed $380 per ounce) over $300 per ounce. The prepaid forward sale contract also included semi-annual delivery requirements of approximately 17,950 ounces beginning June 2000 through June 2007. Newmont entered into forward purchase contracts at prices increasing from $263 per ounce in 2000 to $354 per ounce in 2007 to coincide with these delivery commitments. These contracts have been accounted for as cash flow hedges and at March 31, 2002 had a fair value of $1.9 million.

Offsetting Commodity Instruments

       In December 2001, Newmont entered into a series of equal and offsetting positions with respect to commodity instruments for certain Battle Mountain operations that were outstanding at that time. These contracts effectively closed out the combination matched put and call options and flat forward contracts. The offsetting positions were undesignated as hedges and are marked to market in current earnings.

       These instruments had offsetting fair values at March 31, 2002. The combination put and call options, covering 169,879 ounces, had a fair value of $6.2 million at March 31, 2001, included in Other long-term assets. The flat forward contracts, covering 56,254 ounces, had a fair value of $2.4 million at March 31, 2001.

Recently Acquired Derivative Instruments

       At March 31, 2002, Newmont had the following commodity contracts and financial instruments outstanding that were acquired in the Normandy transaction (expressed in thousands of ounces of gold):

  Expected Maturity Date or Transaction Date         Fair Value  
 
       
 
                                                 
Gold Forward                               There-   Total/        
Sales Contracts 2002   2003   2004   2005   2006   after   Average   US$ (000)  


 
 
 
 
 
 
 
 
                                              As Revised  
(A$ denominated)                                                
Fixed Forwards:                                                
     Ounces/Fair Value   950.0     904.4     254.6                 2,109.0   $  (54,564.6 )
     Average price $ 303.3   $ 305.2   $  324.5               $  306.7        
Floating Rate Forwards:                                                
     Ounces/Fair Value   90.8     391.4     429.0     378.9     475.6     597.5     2,363.2   $  (108,373.3 )
     Average price $ 298.3   $ 315.2   $  324.5   $  328.9   $  334.6   $  376.1   $  337.7        
Synthetic Forwards:                                                
     Ounces/Fair Value       39.0     80.0     80.0     80.0     160.0     439.0   $  (25,242.8 )
     Average price     $ 295.5   $  287.7   $  287.7   $  287.7   $  287.7   $  288.4        
Total Ounces/Fair Value   1,040.8     1,334.8     763.6     458.9     555.6     757.5     4,911.2    $  (188,180.7 )


Notes: Prices for contracts denominated in A$ have been translated at the exchange rate on March 31, 2002 of US$0.53 per A$1. For all floating rate instruments in the table above, the average prices quoted are gross contractual prices. The net forward prices ultimately realized on floating gold hedging contracts are the sum of the gross


contractual forward prices less any associated future financing costs arising from gold borrowing commitments related to such floating rate instruments.
Fixed forward sales contracts provide for delivery of a specified number of ounces at a specified price and date and are accounted for as cash flow hedges.
Floating rate forward contracts provide for a gold lease rate component in the price that takes into account market lease rates over the term of the contract. Gold lease rates reflect the borrowing cost for gold. Floating rate forwards are accounted for as cash flow hedges.
Synthetic forward contracts represent combinations of purchased put options and written call options at the same strike price, maturity date and number of ounces. The combination achieves the same risk management result as gold forward sales contracts.


  Expected Maturity Date or Transaction Date         Fair Value  
 
       
 
                                                 
Put Option                                           There-   Total/        
Contracts:             2002   2003   2004   2005   2006   after   Average   US$ (000)  


 
 
 
 
 
 
 
 
                                              As Revised  
US$ Denominated Fixed                                                
Purchased Puts:                                                
     Ounces/Fair Value   152.4     209.1     202.8     204.8     100.0     95.0     964.1   $ 367.1  
     Average price $  292.3   $  291.9   $  292.3   $  292.2   $  337.9   $  410.7   $ 308.6        
A$ Denominated Fixed                                                
Purchased Puts:                                                
     Ounces/Fair Value   389.6     44.6     50.8                 485.0   $ (1,615.8 )
     Average price $  264.0   $  295.5   $  304.5               $ 271.1        
A$ Denominated Floating                                                
Purchased Puts:                                                
     Ounces/Fair Value   16.0     62.0     37.0     256.0     68.6     287.3     726.9   $ (24,060.0 )
     Average price $  298.3   $  294.4   $  293.0   $  309.5   $  322.7   $  324.3   $ 314.2        
Total Ounces/Fair Value   558.0     315.7     290.6     460.8     168.6     382.3     2,176.0   $ (25,308.7 )


Notes: Prices for contracts denominated in A$ have been translated at the exchange rate at March 31, 2002 of US$ 0.53 per A$ 1. For all floating rate instruments in the table above, the average prices quoted are gross contractual prices. The net forward prices ultimately realized on floating gold hedging contracts are the sum of the gross contractual forward prices less any associated future financing costs arising from gold borrowing commitments related to such floating rate instruments.
Fixed purchased put option contracts provide the right, but not the obligation, to sell a specified number of ounces at a specified strike price and are accounted for as cash flow hedges. Floating forward purchased put option contracts provide for a variable gold lease rate component in the strike price. These options are accounted for as cash flow hedges.


  Expected Maturity Date or Transaction Date         Fair Value  
 
       
 
                                                 
Convertible Put
Options
                                           
and Other
Instruments:
2002   2003   2004   2005   2006   There-
after
  Total/
Average
  US$ (000)  


 
 
 
 
 
 
 
 
                                              As Revised  
A$ Denominated                                                
     Ounces/Fair Value       46.0     37.0     81.5     305.8     1,315.0     1,785.3   $ (148,509.3 )
     Average price     $ 293.0   $ 293.0   $ 290.9   $ 304.1   $ 352.1   $ 338.3        


Notes: Prices for contracts denominated in A$ have been translated at the exchange rate at March 31, 2002 of US$ 0.53 per A$ 1. For all floating rate instruments in the table above, the average prices quoted are gross contractual prices. The net forward prices ultimately realized on floating gold hedging contracts are the sum of the gross contractual forward prices less any associated future financing costs arising from gold borrowing commitments related to such floating rate instruments.


Convertible put option contracts and other instruments are comprised of: a) Convertible option contracts that provide minimum price protection for covered ounces, while providing the opportunity to participate in higher market prices under certain market conditions, and are accounted for as cash flow hedges; b) Knock- out/knock-in option contracts that are contingent sold call options that either terminate (or knock-out) and maintain upside gold price potential or convert (or knock-in) to sold call options, depending on certain market conditions, and are marked to market with the change reflected in income; c) Indexed forward contracts that are potentially convertible to purchased put options, depending on the market gold price at set future value dates during the term of the contract, and are marked to market, with the change reflected in income.

Accounting Treatment for Sales Contracts, Commodity and Derivative Instruments

       Derivative contracts qualifying as normal purchases and sales are accounted for under deferral accounting. Gains and losses arising from changes in the fair value of the contracts are deferred and the contract price is recognized in income following settlement of the contract by physical delivery of production to the counterparty or physical delivery of purchases by the counterparty to Newmont at contract maturity.

       The fair values of derivative contracts qualifying as cash flow hedges are reflected as assets or liabilities in the balance sheet. To the extent these hedges are effective in offsetting forecasted cash flows from the sale of production (the “effective portion”), changes in fair value are deferred in Accumulated other comprehensive income (loss) (“OCI”). Amounts deferred in OCI are reclassified to income when the underlying production is sold. The ineffective portion of the change in the fair value of the derivative is recorded in income in each period.

       The fair values of derivative contracts qualifying as fair value hedges are reflected as assets or liabilities in the balance sheet. Changes in fair value are recorded in income in each period; consistent with recording the mark-to-market value of the underlying hedged asset or liability in income.

       The fair values of all derivative contracts that do not qualify as hedges are reflected as assets or liabilities, with the change in fair value recorded in income each period.

       For the three months ended March 31, 2002, a net gain of $1.0 million was included in income for the ineffective portion of derivatives instruments designated as cash flow hedges and a net gain of $5.3 million, for the change in fair value of derivative instruments that do not qualify as hedges (included in Gain on derivative instruments). The amount to be reclassified from OCI to income for derivative instruments during the next 12 months is a credit of approximately $5 million. The maximum period over which hedged forecasted transactions are expected to occur is 9.5 years.

Foreign Currency Contracts

       Newmont acquired certain currency swap contracts in the Normandy transaction intended to hedge the currency risk on repayment of US$-denominated debt. These contracts were closed out on April 8, 2002, by entering into offsetting positions. The contracts were accounted for on a mark-to-market basis until closed out. Cash in-flow of approximately $50 million is expected in May 2002 upon settlement of these contracts.

       Newmont also acquired currency swap contracts to receive A$ and pay US$ intended to hedge the A$ value of US$-denominated proceeds from the sale of base metals. However, these contracts have been redesignated as hedges of A$-denominated debt and are accounted for as fair value hedges. At March 31, 2002, they had a negative fair value of $34.1 million.

Interest Rate Swap Contracts

       In the Normandy transaction, Newmont acquired A$125 million of interest rate swap contracts covering a portion of its US$100 million, 7-year bonds. The net effect of these contracts is the receipt of interest at 7.5% and payment of interest in A$ at 6.54%. Newmont also acquired A$5 million of interest rate swap contracts covering a subsidiary loan. For the quarter ended March 31, 2002, these transactions resulted in a reduction in interest expense of $0.8 million. These transactions have been designated as fair value hedges and had a negative fair value of $1.0 million at March 31, 2002.

       During the last half of 2001, Newmont entered into contracts to hedge the interest rate risk exposure on a portion of its $275 million 8.625% notes and its $200 million 8.375% debentures. Newmont receives fixed-rate interest payments at 8.625% and 8.375% and pays floating-rate interest amounts based on periodic LIBOR settings plus a spread, ranging from 2.60% to 4.25%. The notional principal amount of these transactions (representing the amount of principal tied to floating interest rate exposure) was $200 million at March 31, 2002. Half of these contracts expire in July 2005 and half expire in May 2011. For the quarter ended March 31, 2002, these transactions resulted in a reduction in interest expense of $1.5 million. These transactions have been designated as fair value hedges and had a negative fair value of $1.9 million and $0.6 million at March 31, 2002 and December 31, 2001, respectively.


US$/Gold Swap Contracts

       Newmont Australia entered into a US$/gold swap contract whereby principal payments on US$ bonds are swapped into gold-denominated payments of 600,000 ounces in 2008. We also receive US$ fixed interest payments and pay gold lease rates, which are indexed to market rates. This instrument is marked to market at each period end, with the change reflected in income, and at March 31, 2002 had a negative fair value of $44.8 million.

Fuel Hedges

       From time to time, Newmont has used certain derivative instruments to hedge a portion of its exposure to fuel price market fluctuations. At March 31, 2002, Newmont had contracts expiring September 2002 covering approximately 5.2 million gallons of diesel fuel at its Nevada operations at prices ranging from approximately $0.61 to $0.69 per gallon. These transactions have been designated as cash flow hedges and had a negative fair value of $0.1 and $1.3 million at March 31, 2002 and December 31, 2001, respectively.

(8) Dividends, Interest, Foreign Currency Exchange and Other Income (Loss)

  Three Months Ended
  March 31,
 
  2002   2001
 
 
  (in thousands)
  As Revised          
Interest income $ 2,796     $ 617  
Foreign currency exchange loss   (7,626 )     (1,017 )
Loss on sale of short-term investments   (368 )      
Gain on sale of exploration properties   1,736       3,567  
Insurance settlements   3,500        
Other   985       261  
 
   
 
               
      Total $ 1,023     $ 3,428  
 
   
 

(9) Merger and Restructuring Expenses

       In conjunction with the Newmont/Battle Mountain merger, expenses of $28.1 million were incurred in the three months ended March 31, 2001. Total merger expenses of $35.0 million, of which $6.9 million were incurred in 2000, included $19.8 million for investment/professional advisory fees, $11.7 for employee benefits and severance costs and $3.5 million for office closures and related disposals of redundant assets. Expenses associated with restructuring Newmont’s exploration program and a voluntary early retirement program were $32.4 million and included $22.1 million for retirement benefits and $10.3 million for employee severance and office closures.

(10) Accounting Changes

       In June 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) Nos. 141 and 142, “Business Combinations” and “Goodwill and Other Intangible Assets,” respectively. The adoption of these standards on January 1, 2002 did not impact Newmont’s historical financial statements or results of operations. As previously noted, the 2002 acquisitions of Normandy and Franco-Nevada were accounted for as purchases and $2.5 billion of the $4.3 billion purchase price represents goodwill, resulting from the excess of the purchase price over the fair value of net assets acquired. Such goodwill will not be amortized, but will be subject to impairment testing at least annually, as prescribed by SFAS No. 142.

       In August 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations,” that established a uniform methodology for accounting for estimated reclamation and abandonment costs. The statement will be adopted January 1, 2003, when Newmont will record the estimated present value of reclamation liabilities and increase the carrying amount of the related assets. Subsequently, reclamation costs will be allocated to expense over the life of the related assets and will be adjusted for changes resulting from the passage of time and revisions to either the timing or amount of the original present value estimate. Newmont is in the process of quantifying the effect of adoption on January 1, 2003.

       In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” which established a single accounting model, based on the framework of SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” for long-lived assets to be disposed of by sale. The statement was effective for fiscal years beginning after December 15, 2001, and there was no impact upon adoption.


      Effective January 1, 2001, Newmont adopted SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” to recognize derivative instruments on the balance sheet as either assets or liabilities and measurement at fair value. Unless specific hedging criteria are met, changes in the derivative’s fair value are recognized currently in earnings. Gains and losses on derivative hedging instruments are recorded in either other comprehensive income (loss) or current earnings (loss), depending on the nature of the instrument.

(11) Stockholders’ Equity

Exchangeable Shares

      In connection with the acquisition of Franco-Nevada, certain holders of Franco-Nevada common stock received 0.8 of an exchangeable share of Franco-Nevada (known as Newmont Mining Corporation of Canada Limited) for each share of common stock held. These exchangeable shares are convertible, at the option of the holder, into shares of Newmont common stock on a one-for-one basis, and entitle holders to dividend and other rights economically equivalent to holders of Newmont common stock. At March 31, 2002, the value of these shares was included in Additional paid-in capital.

Preferred Stock

      In April 2002, Newmont announced the redemption of all issued and outstanding shares of its $3.25 convertible preferred stock as of May 15, 2002. Pursuant to the terms of the convertible preferred stock, Newmont will pay a redemption price of $50.325 per share, plus $0.8125 per share in respect of all dividends that will have accrued on the convertible preferred stock at the redemption date. In settlement of the total redemption price of $51.1375 per share, Newmont will issue to holders of record 1.9187 shares of its common stock. This redemption will eliminate $7.5 million of annual preferred stock dividends prospectively.

(12) Statement of Other Comprehensive Income (Loss)

    Three Months Ended
March 31,
 
   
 
    2002     2001  
 
 
 
    (in thousands)  
      As Revised          
Net loss   $ (8,772 )   $ (37,246 )
   
   
 
                 
Other comprehensive income (loss), net of tax:                
     Unrealized gain (loss) on marketable equity securities     10,978       (4,289 )
     Foreign currency translation adjustments     836       (646 )
     Changes in fair value of cash flow hedge instruments     19,673       278  
   
   
 
                 
Total other comprehensive income (loss)     31,487       (4,657 )
   
   
 
                 
Other comprehensive income (loss)   $ 22,715     $  (41,903 )
   
   
 





(13) Segment Information

        Newmont predominantly operates in a single industry as a worldwide corporation engaged in gold production, exploration for gold and acquisition of gold properties. Newmont’s major operations are in North America, South America and Australia. Other mining operations include small gold producing properties in New Zealand, Indonesia, Uzbekistan and Turkey. Newmont also has a base metal operations segment engaged in copper, zinc and cobalt production and a merchant banking segment. Earnings from operations do not include general corporate expenses, interest (except project-specific interest) or income taxes (except for equity investments).

        Financial information relating to Newmont’s segments is as follows:

Three Months Ended March 31, 2002
(in millions)
As Revised
                                  Other                        
  North   South             Base   Mining   Merchant   Corporate        
  America   America (1)   Australia   Metals   Operations   Banking   and Other   Consolidated
 
 
 
 
 
 
 
 
                                                               
Sales $ 211.9     $ 160.1     $ 73.0     $ 11.5     $ 37.2     $     $     $ 493.7  
Royalties $     $     $     $     $     $ 3.2     $     $ 3.2  
Interest income $     $ 0.1     $ 1.6     $     $     $ 0.8     $ 0.3     $ 2.8  
Interest expense $ 0.1     $ 3.0     $ 6.1     $     $ 0.5     $ 0.2     $ 18.3     $ 28.2  
Depreciation,depletion and amortization $ 34.8     $ 38.2     $ 17.0     $ 0.8     $ 8.3     $ 1.6     $ 2.3     $ 103.0  
Pre-tax income (loss) before minority
    interest and equity loss
$ 2.1     $ 32.6     $ (0.2 )   $ (1.9 )   $ 6.6     $ 4.3     $ (37.3 )   $ 6.2  
Significant non-cash items:                                                              
Amortization of capitalized mining $ 7.5     $     $     $     $     $     $     $ 7.5  
Capital expenditures $ 13.4     $ 26.6     $ 7.4     $ 1.6     $ 2.7     $     $ 1.6     $ 53.3  
                                                               
*Not reduced for minority interest                                                              

Three Months Ended March 31, 2001
(in millions)
                                  Other                          
  North   South             Base   Mining     Merchant   Corporate        
  America   America (1)   Australia   Metals   Operations (2)   Banking   and Other   Consolidated
 
 
 
 
 
 
 
 
                                                               
Sales $ 231.5     $ 141.5     $ 7.4     $     $ 43.7     $     $     $ 424.1  
Interest income $     $ 0.2     $     $     $     $     $ 0.4     $ 0.6  
Interest expense $ 0.1     $ 1.3     $     $     $ 0.3     $     $ 18.6     $ 20.3  
Depreciation and
    amortization
$ 39.1     $ 24.9     $ 1.1     $     $ 8.5     $     $ 1.6     $ 75.2  
Pre-tax income (loss) before
    minority interest and equity loss
$ 21.1     $ 42.8     $ 3.1     $     $ 15.1     $     $ (97.6 )   $ (15.5 )
Significant non-cash items:                                                              
Amortization of capitalized mining $ 5.7     $     $     $     $ 3.9     $     $     $ 9.6  
Capital expenditures $ 26.0     $ 67.3     $ 0.9     $     $ 0.9     $     $ 4.7     $ 99.8  
                                                               
1Not reduced for minority interest                                                             
2Other mining operations include Indonesia and Uzbekistan.



          Newmont operates the Batu Hijau mine in Indonesia that is accounted for as an equity investment. Batu Hijau financial information, based on U.S. generally accepted accounting principles, was as follows:

  Three Months Ended
March 31,
 
 
               
  2002     2001  
 
   
 
               
  (in millions)
    As Revised          
Sales $ 93.1     $ 91.8  
Interest expense $ 18.0     $ 32.7  
Depreciation and depletion $ 27.6     $ 22.0  
Net loss $ (8.0 )   $ (27.4 )
Capital expenditures $ 40.9     $ 31.9  
Total assets $ 2,240.3     $ 2,196.8  

          Newmont’s first quarter equity income for Batu Hijau was $0.5 million for 2002 versus an equity loss of $4.4 million for the 2001 period. For 2002, Newmont’s share of Batu Hijau’s equity income was based on 56.25% of Batu Hijau’s net loss, adjusted for the elimination of $1.1 million of inter-company interest, $2.7 million of inter-company management fees, and amortization adjustments of $1.1 million. For 2001, Newmont’s share of Batu Hijau’s loss was based on 56.25% of Batu Hijau’s net loss, adjusted for the elimination of $7.2 million of inter-company interest, $2.6 million of inter-company management fees, and amortization adjustments of $1.2 million.

(14) Contingencies

      (a) Reclamation Obligations

     Newmont’s mining and exploration activities are subject to various federal and state laws and regulations governing the protection of the environment. These laws and regulations are continually changing and are generally becoming more restrictive. Newmont conducts its operations so as to protect the public health and environment and believes its operations are in compliance with all applicable laws and regulations. Newmont has made, and expects to make in the future, expenditures to comply with such laws and regulations, but cannot predict the amount of such future expenditures. Estimated future reclamation costs are based principally on legal and regulatory requirements. At March 31, 2002 and December 31, 2001, $229.7 million and $128.4 million, respectively, was accrued for reclamation costs relating to currently producing mineral properties.

      In addition, Newmont is involved in several matters concerning environmental obligations associated with former mining activities. Generally, these matters concern developing and implementing remediation plans at the various sites involved. Newmont believes that the related environmental obligations associated with these sites are similar in nature with respect to the development of remediation plans, their risk profile and the compliance required to meet general environmental standards. Based upon Newmont’s best estimate of its liability for these matters, $56.2 million and $57.3 million was accrued for such obligations at March 31, 2002 and December 31, 2001, respectively. These amounts are included in Other accrued liabilities and Reclamation and remediation liabilities. Depending upon the ultimate resolution of these matters, Newmont believes that it is reasonably possible that the liability for t hese matters could be as much as 50% greater or 30% lower than the amount accrued. The amounts accrued for these matters are reviewed periodically based upon facts and circumstances available at the time. Changes in estimates are charged to Costs and expenses, Other in the period estimates are revised. Details about certain of the more significant sites involved are discussed below.

Idarado Mining Company (“Idarado”) — 80.1% owned

      In July 1992, Newmont and Idarado signed a consent decree with the State of Colorado (“State”) that was agreed to by the U.S. District Court of Colorado to settle a lawsuit brought by the State under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), generally referred to as the “Superfund Act.”

      Idarado agreed in the consent decree to undertake specified remediation work at its former mining site in the Telluride/Ouray area of Colorado. Remediation work at this property is substantially complete. If the remediation does not achieve specific performance objectives defined in the consent decree, the State may require Idarado to implement supplemental activities at the site, also as defined in the consent decree. Idarado and Newmont have obtained a $5.8 million reclamation bond to secure their potential obligations under the consent decree. In addition, Idarado settled natural resources damages and past and future response costs, and agreed to habitat enhancement work, under the consent decree.






Resurrection Mining Company (“Resurrection”) — 100% owned

          Newmont, Resurrection and other defendants were named in lawsuits filed by the State of Colorado, under the Superfund Act in 1983, and subsequently consolidated with a lawsuit filed by the U.S. Environmental Protection Agency (“EPA”) in 1986.

      These proceedings sought to compel the defendants to remediate the impacts of pre-existing, historic mining activities near Leadville, Colorado which date back to the mid-1800’s, and which the government agencies claim are causing substantial environmental problems in the area.

      In 1988 and 1989, the EPA issued administrative orders with respect to one area on the site and the defendants have collectively implemented those orders by constructing a water treatment plant, which was placed in operation in early 1992. Remaining remedial work for this area primarily consists of water treatment plant operation and continuing environmental monitoring and maintenance activities. Newmont and Resurrection are currently responsible for 50 percent of these costs; their share of such costs could increase in the event other defendants become unable to pay their share of such costs.

      The parties also have entered into a consent decree with respect to the remaining areas at the site, which apportions liabilities and responsibilities for these areas. The EPA has approved remedial actions for selected components of Resurrection’s portion of the site, which were initiated in 1995. The EPA has not yet selected the final remedy for the site. Accordingly, Newmont cannot yet determine the full extent or cost of its share of the remedial action that will be required. The government agencies may also seek to recover for damages to natural resources. In March 1999, the parties entered into a Memorandum of Understanding (“MOU”) to facilitate the settlement of natural resources damages claims under CERCLA for the upper Arkansas River Basin. The MOU provides a structure for evaluation of damages and possible restoration activities that may be required if it is concluded such damages have occurred.

Dawn Mining Company LLC (“Dawn”) — 51% owned

      Dawn previously leased an open-pit uranium mine, currently inactive, on the Spokane Indian Reservation in the State of Washington. The mine site is subject to regulation by agencies of the U.S. Department of Interior (the Bureau of Indian Affairs and the Bureau of Land Management), as well as the EPA. Dawn also owns a nearby uranium millsite facility, located on private land, which is subject to federal and state regulation.

      In 1991, Dawn’s mining lease at the mine was terminated. As a result, Dawn was required to file a formal mine closure and reclamation plan. The Department of Interior commenced an analysis of Dawn’s proposed plan and alternate closure and reclamation plans for the mine. Work on this analysis has been suspended indefinitely. In mid-2000, the mine was included on the National Priorities List under CERCLA, and the EPA has initiated a remedial investigation/feasibility study under CERCLA to determine environmental conditions and remediation options at the site.

      The EPA has asserted that Dawn and Newmont are liable for reclamation or remediation work and costs at the mine. Dawn does not have sufficient funds to pay for the reclamation plan it proposed or for any alternate plan, or for any additional remediation work or costs at the mine. Newmont will vigorously contest any claims as to its liability. Newmont cannot reasonably predict the likelihood or outcome of any future action against Dawn or Newmont arising from this matter.

      In late 1999, Dawn initiated state approval for a revised mill closure plan that, if implemented, would expedite the reclamation process at the mill. The State of Washington has approved this revised plan. The currently approved plan for the mill is secured by a $14.1 million bond, which is guaranteed by Newmont.

San Luis, Colorado — 100% owned

      The San Luis open-pit gold mine in southern Colorado was operated by a subsidiary of Battle Mountain and ceased operations in November 1996. Since then substantial closure and reclamation work has been performed. In August 1999, the Colorado Department of Public Health and Environment (“CDPHE”) issued a notice of violation of the Water Quality Control Act and in October 1999 amended the notice to authorize operation of a water treatment facility and the discharge of treated water. Battle Mountain has made all submittals required by the CDPHE notice and conducted the required response activities. Battle Mountain negotiated a settlement with CDPHE resolving alleged violations that was effective September 1, 2000. In October 2000, the CDPHE received an “Application for Reconsideration of Order for Civil Penalty” filed by project opponents, seeking to appeal the terms of the settlement. The application w as denied by CDPHE. Project opponents have filed a judicial appeal in the District Court for Costilla County, Colorado, naming the CDPHE as defendant. Battle Mountain has intervened in the appeal to protect its interests in the settlement. Newmont cannot reasonably predict the likelihood or outcome of this or any future action against Battle Mountain or Newmont relating to this site.


       (b) Other

      In June 2000, a transport contractor of Minera Yanacocha spilled approximately 151 kilograms of mercury near the town of Choropampa, Peru, which is located 53 miles southwest of the mine. Mercury is a byproduct of gold mining and was sold to a Lima firm for use in medical instrumentation and industrial applications. A comprehensive health and environmental remediation program was undertaken by Minera Yanacocha. In August 2000, Minera Yanacocha paid under protest a fine of 1,740,000 soles (approximately US$500,000) to the Peruvian government. Minera Yanacocha entered into agreements with a number of individuals impacted by the incident. In addition, it has entered into agreements with three of the communities impacted by this incident to provide a variety of public works as compensation for the disruption and inconvenience caused by the incident. On September 10, 2001, Minera Yanacocha, various wholly-owned subsidiaries of Newmont, and other defendants were named in a lawsuit filed by over 900 Peruvian citizens in Denver District Court for the State of Colorado. This action seeks compensatory and punitive damages based on claims associated with the mercury spill incident. Neither Newmont nor Minera Yanacocha can reasonably predict the likelihood of any additional expenditures related to this matter.

      In a Federal Court action brought by the Australian Securities and Investment Commission, (“ASIC”), against Yandal Gold Pty Ltd., a subsidiary of Newmont Australia Ltd., the judge found that the defendants violated the Australian Corporations Law and ordered payment by Edensor Nominees Pty. Ltd. (“Edensor”) to ASIC of A$28.5 million for distribution to former Yandal Operations Limited shareholders. An appeal by Edensor to the Full Court of the Federal Court, to which Normandy Australia Ltd. became a party on the application of ASIC, was allowed on the basis that the Federal Court lacked jurisdiction to make the order. This decision was successfully appealed to the High Court, which decided that the Full Federal Court was wrong. The High Court held that the Federal Court did have jurisdiction to hear and determine the matter and make orders under the Australian Corporations Law. The High Court sent th e matter back to the Full Federal Court, which rejected Edensor’s appeal on the merits. Baring any additional appeal, Edensor will be obligated to pay the A$28.5 million. Newmont Australia Ltd. previously agreed to pay half of this amount.


 

-

(15) Condensed Consolidating Financial Statements

      The following Condensed Consolidating Financial Statements are presented to satisfy disclosure requirements associated with certain debt covenant obligations:

Consolidating Statement of Operations   Newmont
Mining
Corporation
      Newmont
USA
    Other
Subsidiaries
      Eliminations       Newmont
Mining
Corporation
Consolidated
 

 
   
   
   
   
 
(in millions) As Revised                                        
                                         
Three Months Ended March 31, 2002 Sales and other income
     Sales – gold
  $     $ 403.9     $ 78.3     $     $ 482.2  
     Sales – base metals                 11.5             11.5  
     Royalties                 3.4       (0.2 )     3.2  
     Dividends, interest and other income (loss)—
          intercompany
          0.5       2.1       (2.6 )      
       Dividends, interest, foreign currency exchange and
          other income (loss)
          5.8       (4.7 )           1.1  
   
   
   
   
   
 
                                         
            410.2       90.6       (2.8 )     498.0  
   
   
   
   
   
 
                                         
Costs and Expenses Costs of sales           268.2       65.0       (0.1 )     333.1  
     Depreciation, depletion and amortization           80.7       22.3             103.0  
     Exploration and research           8.9       2.7             11.6  
     General and administrative           16.8       4.5             21.3  
     Interest expense – intercompany                 2.9       (2.9 )      
      Interest, net of capitalized interest of $1.2 million           22.3       5.9             28.2  
     Other income (loss)           3.1       (2.2 )           0.9  
   
   
   
   
   
 
                                         
            400.0       101.1       (3.0 )     498.1  
   
   
   
   
   
 
                                         
Operating income (loss)           10.2       (10.5 )     0.2       (0.1 )
                                         
Gain on derivative instruments                 6.3             6.3  
   
   
   
   
   
 
                                         
Pre-tax income (loss) before minority interest and equity loss           10.2       (4.2 )     0.2       6.2  
                                         
Income tax expense           (2.2 )     (2.6 )           (4.8 )
Minority interest in income (loss) of affiliate           (10.7 )     1.6       (1.5 )     (10.6 )
Equity income (loss) of affiliate     (8.8 )     0.5       (1.5 )     10.2       0.4  
   
   
   
   
   
 
                                         
Net income (loss)   $ (8.8 )   $ (2.2 )   $ (6.7 )   $ 8.9     $ (8.8 )
   
   
   
   
   
 
                                         
Preferred stock dividend     (1.8 )                       (1.8 )
   
   
   
   
   
 
                                         
Net income (loss) applicable to common shares   $ (10.6 )   $ (2.2 )   $ (6.7 )   $ 8.9     $ (10.6 )
   
   
   
   
   
 



                                 
                              Newmont  
  Newmont                         Mining  
Consolidating Statement of Operations Mining   Newmont   Other         Corporation  
(in millions) Corporation   USA   Subsidiaries   Eliminations   Consolidated  


 
   
 
 
 
                                 
Three Months Ended March 31, 2001 Sales and other income    
    Sales – gold    
$   $ 424.1     $   $   $ 424.1  
    Dividends, interest and other income—intercompany                      
    Dividends, interest, foreign currency exchange and other
        income (loss)
      3.4               3.4  
 
 
   
 
 
 
                                 
        427.5               427.5  
 
 
   
 
 
 
                                 
Costs and Expenses Costs of sales       267.9               267.9  
     Depreciation, depletion and amortization       75.2               75.2  
     Exploration and research       15.3               15.3  
     General and administrative       15.9               15.9  
     Interest, net       20.3               20.3  
     Merger and restructuring       60.5               60.5  
     Other       3.5               3.5  
 
 
   
 
 
 
                                 
        458.6               458.6  
 
 
   
 
 
 
                                 
                                 
Operating loss       (31.1 )             (31.1 )
                                 
Gain on derivative instruments       15.6               15.6  
 
 
   
 
 
 
                                 
Pre-tax loss before minority interest and equity loss       (15.5 )             (15.5 )
                                 
Income tax expense       (2.5 )             (2.5 )
Minority interest in income of affiliates       (14.8 )             (14.8 )
Equity loss of affiliate       (4.4 )             (4.4 )
 
 
   
 
 
 
                                 
                                 
Net loss $   $ (37.2 )   $   $   $ (37.2 )
 
 
   
 
 
 
                                 
Preferred stock dividend       (1.9 )             (1.9 )
 
 
   
 
 
 
                                 
Net loss applicable to common shares $   $ (39.1 )   $   $   $ (39.1 )
 
 
   
 
 
 
                                 
                                 



                          Newmont
  Newmont                   Mining
Consolidating Balance Sheets Mining Newmont Other       Corporation
(in millions) As Revised Corporation USA Subsidiaries Eliminations Consolidated


 
 
 
 
 
                               
At March 31, 2002                              
Assets                              
   Cash and cash equivalents $   $ 293.7   $ 217.9   $   $ 511.6  
   Short-term investments       7.2     10.7         17.9  
   Accounts receivable   (132.0 )   73.2     110.0     0.3     51.5  
   Inventories       388.2     126.0     (0.3 )   513.9  
   Marketable securities of Lihir       84.0             84.0  
   Prepaid taxes       13.3             13.3  
   Derivative instruments           20.9         20.9  
   Current portion of deferred income tax assets       9.6     20.1         29.7  
   Other current assets       54.4     (173.5 )   254.5     135.4  
 
 
 
 
 
 
         Current assets   (132.0 )   923.6     332.1     254.5     1,378.2  
 
 
 
 
 
 
                               
   Property, plant and mine development, net       2,163.1     2,172.6         4,335.7  
   Investments       585.0     752.4     (328.6 )   1,008.8  
   Investment in subsidiaries   4,433.6             (4,433.6 )    
   Long-term inventory       83.4     8.5         91.9  
   Derivative instruments       2.1     48.7         50.8  
   Goodwill           2,506.9         2,506.9  
   Intangible assets           46.0         46.0  
   Deferred income tax assets       393.9     87.5         481.4  
   Other long-term assets       89.6     505.0     (460.3 )   134.3  
 
 
 
 
 
 
      Total assets $ 4,301.6   $ 4,240.7   $ 6,459.7   $ (4,968.0 ) $ 10,034.0  
 
 
 
 
 
 
Liabilities                              
   Current portion of long-term debt $   $ 205.9   $ 234.2   $   $ 440.1  
   Accounts payable       69.4     16.2     (0.3 )   85.3  
   Current portion of deferred income tax liabilities       7.9     18.0         25.9  
   Derivative instruments           124.3         124.3  
   Other accrued liabilities   (339.5 )   403.1     (1.0 )   254.7     317.3  
 
 
 
 
 
 
      Current liabilities   (339.5 )   686.3     391.7     254.4     992.9  
 
 
 
 
 
 
   Long-term debt       1,051.0     685.7         1,736.7  
   Reclamation and remediation liabilities       178.8     80.3         259.1  
   Deferred revenue from sale of future production       191.0             191.0  
   Derivative instruments       2.1     375.8         377.9  
   Deferred income tax liabilities       135.0     437.3         572.3  
   Employee related benefits       147.3     1.1         148.4  
   Other long-term liabilities   460.2     88.7     126.3     (460.2 )   215.0  
 
 
 
 
 
 
         Total liabilities   120.7     2,480.2     2,098.2     (205.8 )   4,493.3  
 
 
 
 
 
 
                               
Minority interest in affiliates       261.4     365.6     (328.6 )   298.4  
 
 
 
 
 
 
Stockholders’ equity                              
   Convertible preferred stock   11.5     11.5         (11.5 )   11.5  
   Common stock   537.1     314.3         (314.3 )   537.1  
   Additional paid-in capital   3,918.6     1,462.3     3,989.7     (4,394.0 )   4,976.6  
   Accumulated other comprehensive income (loss)   16.1     5.0     14.6     (16.1 )   19.6  
   Retained earnings (deficit)   (302.4 )   (294.0 )   (8.4 )   302.3     (302.5 )
 
 
 
 
 
 
         Total stockholders’ equity   4,180.9     1,499.1     3,995.9     (4,433.6 )   5,242.3  
 
 
 
 
 
 
                               
         Total liabilities and stockholders’ equity $ 4,301.6   $ 4,240.7   $ 6,459.7   $ (4,968.0 ) $ 10,034.0  
 
 
 
 
 
 



                                   
    Newmont                       Mining  
Consolidating Balance Sheets   Mining   Newmont     Other         Corporation  
(in millions)   Corporation   USA     Subsidiaries   Eliminations   Consolidated  

 
 
   
 
 
 
                                   
                                   
At December 31, 2001                                  
Assets                                  
    Cash and cash equivalents   $   $  149.4     $   $   $ 149.4  
    Short-term investments         8.2               8.2  
    Accounts receivable         19.1               19.1  
    Inventories         384.2               384.2  
    Marketable securities of Lihir         66.9               66.9  
    Prepaid taxes         29.2               29.2  
    Current portion of deferred income tax assets         9.6               9.6  
    Other current assets         42.9               42.9  
   
 
   
 
 
 
        Current assets         709.5               709.5  
   
 
   
 
 
 
                                   
    Property, plant and mine development, net         2,207.0               2,207.0  
    Investment in affiliated companies         559.8               559.8  
    Long-term inventory         92.7               92.7  
    Deferred income tax assets         398.4               398.4  
    Other long-term assets         95.0               95.0  
                                   
   
 
   
 
 
 
        Total assets   $   $  4,062.4     $   $   $ 4,062.4  
   
 
   
 
 
 
                                   
Liabilities                                  
    Current portion of long-term debt   $   $  192.2     $   $   $ 192.2  
    Accounts payable         80.9               80.9  
    Current portion of deferred income tax liabilities         7.9               7.9  
    Other accrued liabilities         204.8               204.8  
   
 
   
 
 
 
        Current liabilities         485.8               485.8  
   
 
   
 
 
 
                                   
    Long-term debt         1,089.7               1,089.7  
    Reclamation and remediation liabilities         176.9               176.9  
    Deferred revenue from sale of future production         191.0               191.0  
    Deferred income tax liabilities         133.6               133.6  
    Employee related benefits         156.8               156.8  
    Other long-term liabilities         97.1               97.1  
                                   
   
 
   
 
 
 
        Total liabilities         2,330.9               2,330.9  
   
 
   
 
 
 
                                   
Minority interest in affiliates         251.5               251.5  
   
 
   
 
 
 
                                   
Stockholders’ equity                                  
    Convertible preferred stock         11.5               11.5  
    Common stock         313.9               313.9  
    Additional paid-in capital         1,458.4               1,458.4  
    Accumulated other comprehensive income (loss)         (12.0 )             (12.0 )
Retained deficit         (291.8 )             (291.8 )
   
 
   
 
 
 
        Total stockholders’ equity         1,480.0               1,480.0  
   
 
   
 
 
 
        Total liabilities and stockholders’ equity   $   $ 4,062.4     $   $   $ 4,062.4  
   
 
   
 
 
 



                                    Newmont  
    Newmont                               Mining  
Statement of Consolidating Cash Flows   Mining       Newmont       Other               Corporation  
(in millions) As Revised   Corporation       USA       Subsidiaries       Eliminations       Consolidated  


   
   
   
   
 
                                       
                                       
Three Months Ended March 31, 2002                                      
Operating activities                                      
   Net income (loss) $ (8.7 )   $ (2.1 )   $ (6.6 )   $ 8.6     $ (8.8 )
   Adjustments to reconcile net loss to net                                      
     cash provided by operating activities         96.3       16.5             112.8  
   Change in working capital         (43.1 )     12.3       (0.6 )     (31.4 )
 
   
   
   
   
 
                                       
Net cash (used in) provided by operating activities   (8.7 )     51.1       22.2       8.0       72.6  
 
   
   
   
   
 
                                       
Investing activities                                      
   Additions to property, plant and mine development         (42.4 )     (10.9 )           (53.3 )
   Proceeds from sale of short-term investments               406.7             406.7  
   Net cash effect of acquisitions               (18.3 )           (18.3 )
   Investments in affiliates and Other   8.7       (24.5 )     0.3       (8.9 )     (24.4 )
 
   
   
   
   
 
Net cash provided by (used in) investing activities   8.7       (66.9 )     377.8       (8.9 )     310.7  
 
   
   
   
   
 
                                       
Financing activities:                                      
   Net borrowings (repayments)         (23.7 )     (1.1 )           (24.8 )
   Dividends paid on common and preferred stock   (13.8 )                       (13.8 )
   Proceeds from stock issuance and Other   13.8       183.3       (181.3 )           15.8  
 
   
   
   
   
 
Net cash provided by (used in) financing activities         159.6       (182.4 )           (22.8 )
 
   
   
   
   
 
                                       
Effect of exchange rate changes on cash         0.3       1.4             1.7  
 
   
   
   
   
 
Net change in cash and cash equivalents         144.1       219.0       (0.9     362.2  
Cash and cash equivalents at beginning of period         149.4                   149.4  
 
   
   
   
   
 
Cash and cash equivalents at end of period $     $ 293.5     $ 219.0     $ (0.9   $ 511.6  
 
   
   
   
   
 



                            Newmont
  Newmont             Mining
Statement of Consolidating Cash Flows Mining   Newmont   Other     Corporation
(in millions) Corporation   USA   Subsidiaries   Eliminations   Consolidated


 
 
 
 
 
 
 
Three Months Ended March 31, 2001                                
Operating activities                                
   Net loss $   $ (37.3 )   $   $   $ (37.3 )
   Adjustments to reconcile net loss to net cash provided
       by operating activities     
      (85.3)               85.3  
   Change in working capital       (29.5 )             (29.5 )
 
 
   
 
 
 
 
Net cash provided by operating activities       18.5               18.5  
 
 
   
 
 
 
 
Investing activities:                                
   Additions to property, plant and mine development       (99.8 )             (99.8 )
   Proceeds from assets sales and Other       9.0               9.0  
 
 
   
 
 
 
 
Net cash used in investing activities       (90.8 )             (90.8 )
 
 
   
 
 
 
 
Financing activities:                                
   Net borrowings (repayments)       3.4               3.4  
   Dividends paid on common and preferred stock       (7.7 )             (7.7 )
   Proceeds from stock issuance and Other       39.7               39.7  
 
 
   
 
 
 
 
Net cash provided by financing activities       35.4               35.4  
 
 
   
 
 
 
 
Effect of exchange rate changes on cash       6.5               6.5  
 
 
   
 
 
 
 
Net change in cash and cash equivalents       (30.4 )             (30.4 )
Cash and cash equivalents at beginning of period       77.6               77.6  
 
 
   
 
 
 
 
Cash and cash equivalents at end of period $   $ 47.2     $   $     47.2  
 
 
   
 
 
 
 


(16) Supplementary Data

       The ratio of earnings to fixed charges and the ratio of earnings to fixed charges and preferred stock dividends for the three months ended March 31, 2002 was 1.3 and 1.1, respectively. The ratio of earnings to fixed charges represents income before income taxes and interest expense divided by interest expense. Interest expense includes amortization of capitalized interest and the portion of rent expense representative of interest. Newmont guarantees certain third party debt; however, it has not been and does not expect to be required to pay any amounts associated with such debt. Therefore, related interest on such debt has not been included in the ratio of earnings to fixed charges.

(17) Subsequent Event

       On April 2, 2002, Newmont sold its 9.7 % equity holding in Lihir Gold Limited through a block trade to Macquarie Equity Capital Markets Limited in Australia for approximately $84 million. Accordingly, a pre-tax gain of approximately $47 million will be recognized in the quarter ending June 30, 2002.

(18) Revision to Financial Statements

       Subsequent to the filing of the first quarter Form 10-Q, the Company determined that certain adjustments were required to the financial statements for the three-month period ended March 31, 2002. Overall, the adjustments reduced the first quarter net loss by $0.2 million, or $0.0 per share. These adjustments primarily were necessitated to properly present the conversion to US GAAP and translation to US dollars of certain financial statement balances of the recently acquired Newmont Australia Limited (formerly Normandy Mining Limited). In addition, certain other adjustments were required to properly record first quarter income related to insurance settlements, insurance expense of the Company’s equity investee, and income related to a property sale. Accordingly, the Company has revised its first quarter financial statements and related disclosures in this amendment, which primarily result in a decrease in the first quarter operating loss from $13.2 million to $0.2 million, a decrease in the gain on derivative instruments from $19.0 million to $6.3 million, a decrease in minority income from affiliates from $12.5 million to $10.6 million, and an increase in equity income of affiliates to $0.5 million from a loss of $1.2 million.

       The following sets forth the effects of the revision to Newmont’s 2002 first quarter statements of consolidated operations and comprehensive income (loss), consolidated balance sheets and statements of cash flows.


NEWMONT MINING CORPORATION
STATEMENTS OF CONSOLIDATED OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
Unaudited

  Three Months Ended
  March 31,
 
                       
  2002   2002   2001
 
   
   
 
                       
  (in thousands, except per share)
  As Previously           As Previously
  Reported     As Revised     Reported
Sales and other income                      
    Sales – gold $ 481,152     $ 482,234     $ 424,097  
    Sales – base metals   11,514       11,514        
    Royalties   3,192       3,192        
    Dividends, interest, foreign currency exchange and other income (loss)   (4,260 )     1,023       3,428  
 
   
   
 
                       
    491,598       497,963       427,525  
 
   
   
 
                       
Costs and expenses                      
    Costs of sales   339,168       333,146       267,860  
    Depreciation, depletion and amortization   105,192       103,001       75,176  
    Exploration and research   11,757       11,567       15,315  
    General and administrative   20,443       21,315       15,911  
    Interest, net of capitalized interest of $1,222, $1,222 and $2,847, respectively   27,376       28,224       20,272  
    Merger and restructuring               60,510  
    Other   870       870       3,543  
 
   
   
 
                       
    504,806       498,123       458,587  
 
   
   
 
                       
Operating loss   (13,208 )     (160 )     (31,062 )
Gain on derivative instruments   18,982       6,331       15,573  
 
   
   
 
                       
Pre-tax income (loss) before minority interest and equity loss   5,774       6,171       (15,489 )
Income tax expense   (1,087 )     (4,816 )     (2,546 )
Minority interest in income of affiliates   (12,505 )     (10,643 )     (14,816 )
Equity income (loss) of affiliates   (1,173 )     516       (4,395 )
 
   
   
 
                       
Net loss $ (8,991 )   $ (8,772 )   $ (37,246 )
Preferred stock dividend   (1,869 )     (1,869 )     (1,869 )
 
   
   
 
                       
Net loss applicable to common shares $ (10,860 )   $ (10,641 )   $ (39,115 )
 
   
   
 
                       
                       
Net loss $ (8,991 )   $ (8,772 )   $ (37,246 )
Other comprehensive income (loss), net of tax   34,773       31,487       (4,657 )
 
   
   
 
                       
Comprehensive income (loss) $ 25,782     $ 22,715     $ (41,903 )
 
   
   
 
                       
                       
Net loss per common share, basic and diluted $ (0.04 )   $ (0.04 )   $ (0.20 )
 
   
   
 
                       
Basic and diluted weighted average shares outstanding   281,467       281,467       192,607  
Cash dividends declared per common share $ 0.03     $ 0.03     $ 0.03  
 
   
   
 


NEWMONT MINING CORPORATION    
CONSOLIDATED BALANCE SHEETS    
Unaudited    
                       
  March 31,   March 31,   December 31,
  2002   2002   2001
 
 
 
 
         (in thousands)       
  As Previously           As Previously
  Reported   As Revised   Reported
Assets                      
      Cash and cash equivalents $ 511,558     $ 511,558     $ 149,431  
      Short-term investments   17,910       17,910       8,185  
      Accounts receivable   50,750       51,485       19,088  
      Inventories   509,575       513,806       384,202  
      Marketable securities of Lihir   84,002       84,002       66,918  
      Prepaid taxes   13,345       13,345       29,229  
      Derivative instruments   20,851       20,851        
      Current portion of deferred income tax assets   29,747       29,747       9,627  
      Other current assets   136,785       135,526       42,780  
 
   
   
 
                       
         Current assets   1,374,523       1,378,230       709,460  
      Property, plant and mine development, net   4,332,590       4,335,681       2,207,048  
      Investments   1,007,134       1,008,823       559,809  
      Long-term inventory   91,924       91,924       92,689  
      Derivative instruments   50,813       50,813       2,621  
      Goodwill   2,506,935       2,506,935        
      Intangible assets   45,997       45,997        
      Deferred income tax assets   481,423       481,423       398,391  
      Other long-term assets   134,191       134,191       92,387  
 
   
   
 
                       
         Total assets $ 10,025,530     $ 10,034,017     $ 4,062,405  
 
   
   
 
                       
Liabilities                      
                       
      Current portion of long-term debt $ 440,077     $ 440,077     $ 192,151  
      Accounts payable   85,255       85,255       80,884  
      Current portion of deferred income tax liabilities   23,375       25,895       7,914  
      Derivative instruments   124,286       124,286       1,331  
      Other accrued liabilities   312,452       317,434       203,531  
 
   
   
 
                       
         Current liabilities   985,445       992,947       485,811  
      Long-term debt   1,736,718       1,736,718       1,089,718  
      Reclamation and remediation liabilities   261,770       259,070       176,934  
      Deferred revenue from sale of future production   191,039       191,039       191,039  
      Derivative instruments   370,266       377,885       8,260  
      Deferred income tax liabilities   571,713       572,262       133,621  
      Employee related benefits   148,373       148,373       156,834  
      Other long-term liabilities   214,974       214,974       88,661  
 
   
   
 
                       
         Total liabilities   4,480,298       4,493,268       2,330,878  
 
   
   
 
                       
                       
Minority interest in affiliates   299,752       298,336       251,479  
 
   
   
 
                       
Stockholders’ equity                      
                       
      Convertible preferred stock   11,500       11,500       11,500  
      Common stock   537,139       537,139       313,881  
      Additional paid-in capital   4,976,629       4,976,629       1,458,369  
      Accumulated other comprehensive income (loss)   22,919       19,633       (11,854 )
      Retained deficit   (302,707 )     (302,488 )     (291,848 )
 
   
   
 
                       
         Total stockholders’ equity   5,245,480       5,242,413       1,480,048  
 
   
   
 
                       
         Total liabilities and stockholders’ equity $ 10,025,530     $ 10,034,017     $ 4,062,405  
 
   
   
 
                       


NEWMONT MINING CORPORATION
STATEMENTS OF CONSOLIDATED CASH FLOW

  Three Months Ended
  March 31,
 
 
  2002   2002   2001
 
 
 
            Unaudited        
          (in thousands)        
  As     As
  Previously     Previously
  Reported   As Revised   Reported
Operating activities:                      
    Net loss $ (8,991 )   $ (8,772 )   $  (37,246 )
    Adjustments to reconcile net loss to net cash provided by operating activities:                      
    Depreciation, depletion and amortization   105,192       103,001       75,176  
    Amortization of capitalized mining costs   7,498       7,498       9,612  
    Deferred tax benefit   (1,215 )     (666 )     (19,790 )
    Gain on derivative instruments   (18,982 )     (6,331 )     (15,573 )
    Noncash merger and restructuring expenses               21,589  
    Foreign currency exchange loss   11,230       3,621       1,017  
    Minority interest, net of dividends   12,505       10,643       9,618  
    Undistributed losses of affiliated subsidiaries   1,173       (516 )     4,395  
    Gain on sale of assets and other   (3,349 )     (4,452 )     (674 )
    (Increase) decrease in operating assets:                      
            Accounts receivable   11,840       18,920       4,216  
            Inventories   9,536       5,305       29,735  
            Other assets   15,384       16,642       8,215  
Increase (decrease) in operating liabilities:                      
            Accounts payable and other accrued liabilities   (67,395 )     (43,642 )     (66,314 )
            Other liabilities   (1,823 )     (28,648 )     (5,369 )
 
   
   
 
                       
Net cash provided by operating activities   72,603       72,603       18,607  
 
   
   
 
                       
Investing activities:                      
    Additions to property, plant and mine development   (53,278 )     (53,278 )     (99,813 )
    Repayments (advances to) from joint ventures and affiliates   (24,750 )     (24,750 )     8,794  
    Proceeds from sale of short-term investments   406,731       406,731        
    Net cash effect of acquisitions   (18,313 )     (18,313 )      
    Proceeds from asset sales and other   269       269       188  
 
   
   
 
                       
Net cash provided by (used in) investing activities   310,659       310,659       (90,831 )
 
   
   
 
                       
Financing activities:                      
    Repayment of short-term debt               (10,000 )
    Proceeds from long-term debt   53,431       450,431       462,000  
    Repayment of long-term debt   (78,244 )     (475,244 )     (448,560 )
    Dividends paid on common and preferred stock   (13,792 )     (13,792 )     (7,730 )
    Decrease in restricted cash               40,000  
    Proceeds from stock issuance and other   15,739       15,739       (324 )
 
   
   
 
                       
Net cash (used in) provided by financing activities   (22,866 )     (22,866 )     35,386  
 
   
   
 
                       
Effect of exchange rate changes on cash   1,731       1,731       6,459  
 
   
   
 
                       
Net change in cash and cash equivalents   362,127       362,127       (30,379 )
Cash and cash equivalents at beginning of period   149,431       149,431       77,558  
 
   
   
 
                       
Cash and cash equivalents at end of period $ 511,558     $ 511,558     $  47,179  
 
   
   
 
                       
Supplemental information:                      
    Interest paid, net of amounts capitalized of $1,222, $1,222 and $2,847,
        respectively
$ 31,916     $ 31,916     $  28,175  
    Income taxes paid $ 13,974     $ 13,974     $  18,424  
                       


ITEM 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition

       The following provides information that management believes is relevant to an assessment and understanding of the consolidated results of operations and financial condition of Newmont Mining Corporation and its subsidiaries (collectively, “Newmont”). The discussion should be read in conjunction with Management’s Discussion and Analysis included in Newmont’s Annual Report on Form 10-K.

       Subsequent to the filing of the first quarter Form 10-Q, the Company determined that certain adjustments were required to the financial statements for the three-month period ended March 31, 2002. Overall, the adjustments reduced the first quarter net loss by $0.2 million, or $0.0 per share. These adjustments primarily were necessitated to properly present the conversion to US GAAP and translation to US dollars of certain financial statement balances of the recently acquired Newmont Australia Limited (formerly Normandy Mining Limited). In addition, certain other adjustments were required to properly record first quarter income related to insurance settlements, insurance expense of the Company’s equity investee, and income related to a property sale. Accordingly, the Company has revised its first quarter financial statements and related disclosures in this amendment, which result in a decrease in the first quarter operating loss from $13.2 million to $0.2 million, a decrease in the gain on derivative instruments from $19.0 million to $6.3 million, a decrease in minority income from affiliates from $12.5 million to $10.6 million, and an increase in equity income of affiliates to $0.5 million from a loss of $1.2 million.

       Refer to Note 18 to the March 31, 2002 condensed consolidated financial statements for a comparison of the previously filed and revised statements of consolidated operations and comprehensive income (loss), consolidated balance sheets, and statement of consolidated cash flows.

       On February 13, 2002, Newmont stockholders approved adoption of an Agreement and Plan of Merger that provided for a restructuring of Newmont to facilitate the February 2002 acquisitions described below and to create a flexible corporate structure. Newmont merged with an indirect wholly-owned subsidiary that resulted in Newmont (or old Newmont) becoming a direct wholly-owned subsidiary of a new holding company. The new holding company, previously a direct, wholly-owned subsidiary of old Newmont, was renamed Newmont Mining Corporation. There was no impact to the consolidated financial statements of Newmont as a result of this restructuring and former stockholders of old Newmont became stockholders of the new holding company.

       In November 2001, Newmont announced proposed acquisitions of Normandy Mining Limited (“Normandy”), an Australian company, and Franco-Nevada Mining Corporation Limited (“Franco-Nevada”), a Canadian company. On February 16, 2002, Newmont completed the acquisition of Franco-Nevada pursuant to a Plan of Arrangement. On February 20, 2002, Newmont gained control of Normandy through an off-market bid for all of the ordinary shares in the capital of Normandy. For accounting purposes, the effective date of the Normandy acquisition was the close of business on February 15, 2002, when Newmont received binding tenders for more than 50% of the shares of Normandy. Accordingly, the results of operations of Normandy and Franco-Nevada have been included in the accompanying financial statements from February 16, 2002 forward. On February 26, 2002, when the off-market bid for Normandy expired, Newmont had a relevant interest in more than 96% of Normandy’s outstanding shares. NMC exercised their compulsory acquisition rights under Australian law to acquire the remaining shares of Normandy in April 2002.

       Consideration paid for Normandy included 3.85 shares of Newmont common stock for every 100 ordinary shares of Normandy (including ordinary shares represented by American depositary receipts) plus A$0.50 per Normandy share, or the U.S. dollar equivalent of that amount for Normandy stockholders outside Australia. Pursuant to a Canadian Plan of Arrangement, Newmont acquired Franco-Nevada in a stock-for-stock transaction in which Franco-Nevada common stockholders received 0.8 of a share of NMC common stock or 0.8 of a Canadian exchangeable share (exchangeable for NMC common), for each common share of Franco-Nevada. The exchangeable shares are substantially equivalent to NMC common shares. The purchase price for these acquisitions totaled $4.3 billion, comprised of 197.4 million NMC shares (or share equivalents), $462.1 million in cash and approximately $90 million of direct costs. The value of NMC shares (or share equivalents) was $19.01 per share based on the average market price of the shares over the two-day period before and after January 2, 2002, the last trading day before the final and revised terms for the acquisitions were announced.

       The acquisitions were accounted for using the purchase method whereby assets and liabilities were recorded at fair market value as of the date of acquisition. The excess of the purchase price over such fair value was recorded as goodwill. As described in Note (2), we have allocated the purchase price to assets and liabilities on a preliminary basis and expect to finalize the allocation following completion of an independent appraisal process by the end of the second quarter.



       Goodwill of $2.5 billion was assigned to assets acquired and will not be amortized. Goodwill is subject to a determination of fair value at least annually and at such times as events or circumstances indicate impairment has occurred. We expect that approximately $70 million of after-tax synergies will be realized in the first full year of operations, increasing to approximately $90 million by the end of the second full year. Such synergies will be obtained from the rationalization of corporate overhead and exploration and development budgets as well as operating efficiencies and costs reductions associated with procurement, interest and tax benefits.

       Following the February 2002 acquisitions, Normandy was renamed Newmont Australia Limited and Franco-Nevada was renamed Newmont Mining Corporation of Canada Limited. Old Newmont was renamed Newmont USA Limited.

       In January 2001, Newmont completed a merger with Battle Mountain Gold Company, where each share of common stock of Battle Mountain and each exchangeable share of Battle Mountain Canada Ltd. (a wholly-owned subsidiary of Battle Mountain) was converted into the right to receive 0.105 share of NMC stock, or approximately 24.1 million shares. The transaction was accounted for as a pooling of interests and as such, consolidated financial statements include Battle Mountain’s financial data as if Battle Mountain had always been part of Newmont.


SUMMARY

       Newmont recorded a net loss to common shares of $10.6 million ($0.04 per share) in the first quarter 2002 compared with a net loss of $39.1 million ($0.20 per share) in the first quarter of 2001. The first quarter of 2002 included, net of tax, a ($0.3) million ($0.00 per share) for non-cash gains on derivative instruments. The first quarter of 2001 included, net of tax, $43.7 million ($0.23 per share) for merger and restructuring and $10.1 million ($0.05 per share) for a non-cash unrealized mark-to-market gain on call option contracts. Total equity gold sales, total cash costs and average realized gold prices were as follows:


  Three Months Ended
  March 31,
 
           
  2002   2001
 
 
  As Revised      
Equity gold sales ounces (000)   1,465     1,422
Total cash costs per ounce $ 195   $ 171
Total costs per ounce $ 258   $ 220
Average price realized per ounce $ 292   $ 264

       For the full year 2002 and based on our current asset base portfolio, equity gold sales are forecast at 7.5 million ounces at a total cash cost of approximately $180 per ounce and projected net income to common shares is between $0.40 and $0.50 per share, assuming current gold prices and excluding any gains or losses on derivative instruments.

MARKET CONDITIONS AND RISKS

       METAL PRICE

       Changes in the market price of gold significantly affect Newmont’s profitability and cash flow. Gold prices can fluctuate widely and are affected by numerous factors, such as demand; forward selling by producers; central bank sales, purchases and lending; investor sentiment and global mine production levels. The gold price fell to a 20-year low of $253 in July 1999, recovered moderately throughout 2001 and has recently increased to over $300 per ounce. Changes in the market price of copper also affect Newmont’s profitability and cash flow from its Batu Hijau mine in Indonesia and its Golden Grove mine in Australia.

       Newmont generally sold its production at market prices and has used a limited number of commodity instruments to provide a measure of price protection. In conjunction with the Normandy transaction, we acquired a substantial derivative instrument position. The tables are expressed in thousands of ounces of gold, and prices for contracts denominated in A$ have been translated to US$ at the exchange rate at March 31, 2002 of US$ 0.53 per A$ 1.

  Expected Maturity Date or Transaction Date         Fair Value  
 
       
 
                                                 
Gold Forward Sales                                                
Contracts 2002   2003   2004   2005   2006   Thereafter   Total/Average   US$ (000)  


 
 
 
 
 
 
 
 
                                            As Revised  
(A$ denominated)                                                
Fixed Forwards:                                                
      Ounces/Fair Value   950.0     904.4     254.6                 2,109.0   $ (54,564.6 )
      Average price $ 303.3   $ 305.2   $ 324.5               $ 306.7        
Floating Rate Forwards:                                                
      Ounces/Fair Value   90.8     391.4     429.0     378.9     475.6     597.5     2,363.2   $ (108,373.3 )
      Average price $ 298.3   $ 315.2   $ 324.5   $ 328.9   $ 334.6   $ 376.1   $ 337.7        
Synthetic Forwards:                                                
      Ounces/Fair Value       39.0     80.0     80.0     80.0     160.0     439.0   $ (25,242.8 )
      Average price     $ 295.5   $ 287.7   $ 287.7   $ 287.7   $ 287.7   $ 288.4        
Total Ounces/Fair Value   1,040.8     1,334.8     763.6     458.9     555.6     757.5     4,911.2   $ (188,180.7 )


Notes: Prices for contracts denominated in A$ have been translated at the exchange rate at March 31, 2002 of US$0.53 per A$1. For all floating rate instruments in the table above, the average prices quoted are gross contractual prices. The net forward prices ultimately realized on floating gold hedging contracts are the sum of the gross contractual forward prices less any associated future financing costs arising from gold borrowing commitments related to such floating rate instruments.
Fixed forward sales contracts provide for delivery of a specified number of ounces at a specified price and date and are accounted for as cash flow hedges.
Floating rate forward contracts provide for a gold lease rate component in the price that takes into account market lease rates over the term of the contract. Gold lease rates reflect the borrowing cost for gold. Floating rate forwards are accounted for as cash flow hedges.


Synthetic forward contracts represent combinations of purchased put options and written call options at the same strike price, maturity date and number of ounces. The combination achieves the same risk management result as gold forward sales contracts.

  Expected Maturity Date or Transaction Date         Fair Value  
 
       
 
                                                 
Put Option Contracts: 2002   2003   2004   2005   2006   Thereafter   Total/Average   US$ (000)  


 
 
 
 
 
 
 
 
                                            As Revised  
US$ Denominated Fixed Purchased Puts:                                                
   Ounces/Fair Value   152.4     209.1     202.8  <